Mortgage lending to home buyers picked up in July, according to the Council of Mortgage Lenders. The number of loans rose by 5% from June to 49,500 and was also 5% up on a year ago.
Despite this rise, the level of borrowing is still half the level recorded in the years before the banking crisis started in 2007. A slight easing of mortgage rationing meant first-time buyers had to put down an average deposit of 19% in July. That was the first time in more than three years that the average first-time buyer has been able to put down a deposit that was less than 20% of the home being bought.
Council of Mortgage Lenders director general Paul Smee said: "July's figures show a gradual improvement in the market, with lending approaching the sort of levels we saw at the end of the stamp duty concession. "While overall market conditions remain tight, new initiatives such as ‘Funding for Lending’ and ‘NewBuy’ have the potential to help lending to continue to ease gradually."
Mark Harris of mortgage brokers SPF Private Clients said most first-timers still relied on parental help for their deposits. "That [19%] is a hefty deposit for most people to find, and only those who have assistance from their parents are likely to be able to raise it," he said. "However, we hope the Funding for Lending scheme will start to make a difference soon. "Lenders have told us that they are encouraged by it, seeing it as an opportunity to borrow from the Bank of England at generous rates," he added.