New mortgage approvals rose by 12% compared to July, and by 11% compared to the same period last year, although gross mortgage lending was weighed down by weak remortgage applications.
According to new data from the Council of Mortgage Lenders, a total of 55,300 loans were advanced for house purchase in August, worth £8.4billion, compared to 49,500 in July and 49,900 in August 2011, the largest number of loans advanced in one month since the summer of 2010.
In contrast, remortgage lending continued its downward trend, accounting for just 22% of gross lending in August, compared to 33% in August last year. Remortgage lending totalled £2.9 billion in August, down by almost 33% compared to the same period last year and by over 9% from July.
This weakness in remortgage lending weighed down overall gross mortgage lending, which was 2% lower than the same period last year but up slightly compared to the previous month. Gross lending totalled £12.9 billion in August, compared to £12.8 billion in July.
Meanwhile, lending to first-time buyers rose by 14% in August compared to July and up by 18% on the same time last year. A total of 21, 600 loans were advanced to first-time buyers, worth £2.8 billion, only 2,600 fewer loans than in March when lending to FTBs was elevated by the end of the stamp duty holiday.
For the second consecutive month, the average loan-to-value (LTV) ratio for a first-time buyer remained above 80%. At 81%, the LTV ratio is at its highest point in over 3 years, although it is too early to draw any conclusions about any persistent trends or the impact of the New Buy scheme.
Also contributing to the increase in house purchase lending, a total of 33,800 loans, worth £5.7 billion, were advanced to home movers in August. This represented a 10.5% increase on July and a 7% rise compared to August last year.
Commenting on the data, CML director general Paul Smee said: “House purchase lending showed an encouraging rise in August but it’s unclear whether this reflects just the unravelling of previous factors such as the Jubilee and the Olympic Games, or a shift in the underlying picture.
“We will wait and see whether schemes such as Funding for Lending and NewBuy provide a further boost to the market in coming months.”Source: Council of Mortgage Lenders