Gross UK mortgage lending rose 12% in July to £16.7 billion, up from £14.9 billion in June and 29% on last July, according to the Council of Mortgage Lenders (CML).

Survey results published by the CML show that this growth in July continued to be buoyed by home-owner house purchase lending, in particular by growth in first-time buyers.

Lending for home-owner house purchase
Total home-owner house purchase loans (both movers and first-time buyers) continued to show the resilience and growth seen throughout 2013. 57,400 house purchase loans were advanced in July, an increase of 9% on June and up by 21% on July last year. These loans had a total value of £9.1bn, which was an increase of 12% on June and 23% compared to July last year.

Table 1: Loans for house purchase and remortgage

Lending to first-time buyers
The strong growth in lending to first-time buyers since the beginning of the year has continued, with the number of loans advanced increasing by 5% compared to June. In July, 25,300 loans were advanced to first-time buyers, worth £3.5bn. By value, first-time buyer lending was 6% up on June and 46% up on July last year.

The typical first-time buyer loan size stayed almost unchanged from June at £117,038, while average first-time buyer household income increased to £36,142 from £35,873 in June.

Affordability improved marginally in July compared to June reflecting the average loan size remaining largely unchanged but a higher income average, alongside a further fall in typical interest rates. Typically, first-time buyers in July borrowed 3.31 times their income in comparison to 3.33 in June and mortgage payments (capital and interest) accounted for 19.2% of income, down from 19.3% in June.

Table 2: First-time buyers, lending and affordability

	Number of loans	Value of loans £m	Average loan to value	Average income multiple	Proportion of income spent on interest payments	Proportion of income spent on capital and interest payments
July 2013	25,300	3,500	82%	3.31	11.8%	19.2%
Change from June 2013	5.4%	6.1%	80%	3.33	12.1%	19.3%
Change from July 2012	40.6%	45.8%	81%	3.24	13.7%	20.0%

Lending to home movers
Lending to home movers showed strong growth in July, with 32,000 loans advanced – up by 12% compared to June and 9% compared to July last year. By value, movers borrowed £5.6bn, an increase of 17% compared to June and 12% compared to July last year.

The percentage of income spent on mortgage payments by home movers remained relatively similar to June 2013, increasing from 18.2% to 18.3% in July. However, this was a decrease in comparison to July 2012 when it was 19.3%.

Table 3: Home movers, lending and affordability

Lending to home owners for remortgage
Lending to home-owners for remortgage increased by 9% in July compared to June but still remains subdued compared to historical volumes. In total, £3.8bn was advanced in July to home-owners for remortgages which represented a 9% increase in value on June and a 15% increase on July last year.

Remortgage activity reported by CML is likely to increase in the coming months – Bank of England approvals data showed a 40% increase in July.

Lending for buy-to-let
Lending for buy-to-let has continued to follow an upward trend, similar to the market overall. 15,200 buy-to-let loans were advanced in July, an increase of 12% compared to June. This represents a value of £2bn which was 11% higher than in June.

Lending for buy-to-let house purchase was up 7% in July compared to June, a total of 7,600 loans. The value of these loans was £900m, up 13% from June.

Table 4: Loans for buy-to-let house purchase and remortgage

Lending for buy-to-let remortgage
There was strong growth in buy-to-let remortgage lending which increased by 24% in July compared to June, a value of £1.1bn. This equated to 7,200 loans in July for buy-to-let remortgage in total, an increase by 13.4% on June 2013.

Paul Smee, director general of the CML, said: “The notable feature is the catch-up in home mover activity. 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.”