July House Purchase Loans up 19% on Last Year - CML

UK 14 September 2009 - Mortgage lending increased massively in July according to a new survey by the Council of Mortgage Lenders, who revealed the first significant increase in mortgage lending since July 2007.

In July mortgage lending was some 27% higher than in June and 19% higher than in July last year. The figures of the CML survey are backed-up by the July data from the British Bankers Association, which found 76.7% more house purchase loans were approved this year, than last year, and that the value of those loans was 79.1% more this year than last.

However, if you look at the time history series the result isn't as significant as it sounds. According to the historical data, July is typically a high point in the year for house purchase mortgage lending. Yet, lending for house purchases really fell off the proverbial cliff in July 2008.

So now, when lending is just over half what it would be in a July when times are good, is still 76.7% higher than it was in July 2008. It says more about how low lending was in July last year, than it does about it being high this year.

That said, it is definitely a step in the right direction, and would suggest that mortgage finance is getting easier to obtain, as well as the fact that more people are looking for it. The historical data also shows that house purchase mortgage lending has been increasing since February of this year.

The CML survey also found that loans given to first time buyers were 22% higher in July this year, which the Guardian have put down to increased affordability of entry-level homes, which continue to fall in value. This was backed up, said the Guardian by the results of a survey by Findaproperty.com.

Though the fact that house purchase mortgage lending has been rising since February this year, will be viewed as a positive sign by many. I am still sticking to my forecast of 2011 for the UK housing market to bottom properly.