BoE: July lending stays strong

House purchase levels stood at 66,569 in July, down from 67,085 in June, although they still far exceed the May total of 61,914.

Remortgaging approvals increased to 32,983 in July compared to 32,031 in June and 29,436 in May.

Richard Sexton, director of e.surv chartered surveyors, said: “The mortgage market has fully adapted to the introduction of MMR, shown by a second month of healthy house purchase lending.

“Home lending dipped in April and May, as the introduction of new regulations temporarily clogged up the system.

“Lenders needed to train staff and get used to longer advisory processes as part of adjusting to the new rules.

“Now that backlog of applications has been processed, mortgage lending is running a smooth course once more.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, was just as positive.

He said: “One would expect the mortgage market to slow down towards the end of July and through August as it is traditionally a quiet time of year when not much gets done.

“However, we had one of our best months for new business - emphasising the continued strength of the London property market in particular.”

He expects remortgaging rates to remain cheap in the months ahead, adding that an imminent base rate rise is looking unlikely.

Harris added: “The hysteria surrounding the hiking of Bank base rate has subsided again, with the economic news since early August dampening down speculation.

“Although two members of the Monetary Policy Committee called for a rise in rates at the last meeting, the majority of members thought there was insufficient evidence of inflationary pressures to justify an immediate increase in base rate.

“However, if borrowers are worried, there are still some excellent fixed rates available and we expect remortgaging to be strong in coming months.”

Sexton feels the July figures demonstrate that Help to Buy is still crucial for the market.

He said: “A large proportion of house purchase lending was to high LTV borrowers in July – about a fifth of house purchase approvals.

“Help to Buy is still needed to support borrowers outside of the capital, particularly in regions where the recovery is still limping rather than racing along.

“Tailoring the scheme to the individual needs of each region would be one way of focusing support to borrowers where it’s most needed.”