Home deposits rise as market slows

The average first time-buyer borrowed 3.33 times their income, down from 3.35 in May. While the average home mover borrowed 2.94 times their income, down from 2.97 in May.

There were 18,100 loans to first-time buyers in June worth £2.3billion, an eight per cent decline in volume and nine per cent decline in value from May.

There were 29,100 loans to home movers worth £4.7billion, down nine per cent in volume and value from May. The share of house purchase loans to first-time buyers and home movers remained stable at 38 per cent and 62 per cent respectively.

Gross lending decreased slightly to £23.6billion in June, down four per cent from May and 32 per cent lower than June last year. The largest share of gross lending was remortgaging (44per cent) with 75,000 loans worth £10.3billion in June. Loans for house purchase accounted for 30 per cent of gross lending with 47,000 loans worth £7billion.

Fixed-rate mortgages accounted for an increasing share of products taken out at 69 per cent, up from 66 per cent in May. This trend is likely to continue as fixed-rate prices have fallen in recent weeks in line with the decline in swap rates.

While all parts of the mortgage market are suffering a reduction in volumes, the majority of mortgages continue to be obtained through an intermediary.

The credit crunch had a particularly marked effect in the first quarter of the year, when there was an increase in the proportion of borrowers seeking the advice of an intermediary.

In the second quarter of 2008, 78 per cent of first-time buyers and 61 per cent of home movers used an intermediary.

CML head of research, Bob Pannell said: “Mortgage lending activity remains relatively weak and will decline further in the coming months as a result of funding constraints and lower consumer demand.
“The majority of lending continues to be to people with larger deposits, which is prudent for borrowers and lenders in a slowing housing market.�