CML news & views
Issue no. 17 - 9 September 2008
Affordability for first-time buyers tightens
Remortgaging increased in July, the latest data from our regulated mortgage survey showed. There were 85,000 remortgage loans, worth £11.9 billion, during the month, up 14% by volume and 16% by value on June.
Lending for house purchase in July was unchanged from the previous month, with 47,000 loans, worth £7.1 billion. Overall, however, lending for house purchase was around 50% lower than a year previously.
Affordability for first-time buyers was particularly challenging. In July, the average buyer in this category had a 15% deposit, up from 13% the month before. That meant that the average first-time buyer deposit was more than £19,000.
Raising the stamp duty threshold from £125,000 to £175,000 will help offset the affordability constraints for some first-time buyers. But some may now be waiting for house prices to stabilise before making a purchase.
Tracker rate mortgages became more popular in July, with borrowers anticipating that the next decision on the Bank rate will be downwards. More than a quarter of borrowers (28%) took out a tracker loan in July, up from 21% in June.
