Mortgage lending hits highest level in a year

Overall lending for house purchases hit its highest level in almost a year in July, according to the latest figures from the Council of Mortgage Lenders (CML).

The value of loans increased from £6.9bn to £7.3bn, while the number of mortgages rose by 1,000 to 48,800. Both were at their highest since last August 2010, although they were lower than July last year.

Lending to first-time buyers climbed to £2.3bn from £2.2bn in the previous month. It was the highest monthly total since July 2010 (£2.4bn).

Average deposits for first-time buyers have held steady at 20% for most of 2011. Buyers typically borrowed 3.18 times their income in July, down from 3.22 in June.

Meanwhile, the popularity of fixed-rate mortgages is beginning to fade after hitting an 18-month high in April. In July, 60% of borrowers took out a fixed-rate product, down from 62% in June. The drop follows increasing expectation that there will be no rise in bank rates in the near future.

The majority of borrowers are continuing to opt for repayment mortgages, the CML said.