Mortgage lending to first-time buyers has reached its strongest level in more than five and a half years as the housing market revival continues.
The Council of Mortgage Lenders (CML) reported that the number of loans handed out to people taking their first step on the property ladder was two-fifths (40%) higher in July than the same period a year ago, and 5% higher than in June.
Some 25,300 loans worth £3 5 billion were advanced to first-time buyers in July, marking the highest number seen since November 2007.
Total UK mortgage lending stood at £16.7 billion in July, a 29% year-on-year increase, as lending to home movers, buy-to-let investors and people looking to remortgage also saw growth.
A stream of reports have suggested that the recent upswing in the housing market is not yet showing any sign of tailing off. The stronger-than-expected burst in activity has caused several experts to revise their house price forecasts upwards for 2013 and some have raised concerns that a house price “bubble” could be created.
Paul Smee, director general of the CML, said the strong monthly rise in home mover activity is significant. It suggests that more housing chains are being freed up as the market gathers pace.
He said: “For only the second time this year the monthly growth of movers exceeded the growth in first-time buyers. This is a positive sign of a mortgage market where obstacles to transactions are now reducing.”
The report also showed that buy-to-let lending is continuing on an upward trend. Tenant demand in the rental sector is still reported as strong, despite more people getting on to the property ladder. More landlords are being attracted into the market due to the prospect of decent rental returns.
Some 15,200 buy-to-let loans were advanced in July worth £2 billion, marking a 12% month-on-month increase.