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The number of loans taken out by home movers rose by 8% compared to June and by 4% on July last year. Home movers were advanced 30,500 loans worth £5.1 billion in July, with the increase contributing to a jump in house purchase lending.

This continued an upward trend in house purchase lending following the expected drop in April, linked to the end of the stamp duty concession in March, the CML said. A total of 49,500 loans worth £7.6 million were advanced, a 5% rise compared to both June and the same period last year, as well as a 7% rise in value on the previous month.

The effect of this increase was a rise in gross lending. Gross lending totalled £12.7 billion in July, a 7% increase from £11.9 billion in June and up by 2% compared to July last year.

Lending to first time buyers remained resilient in July, while not matching the growth shown by home mover lending. A total of 19,000 loans were advanced to first time buyers, down from 19,200 in June, but stronger than at the same time last year.

These loans were valued at a total of £2.5 billion, a slight increase on the June figure, and the largest monthly total since March when lending was boosted by the end of the stamp duty holiday.

However, the CML said that despite an increase in total lending value and a fall in the number of loans, the median loan size for first time buyers decreased in July compared to June. It said this was caused by an increase in the number of first time buyers purchasing more expensive properties, with 14% of first time buyers buying homes worth over £250,000 compared to 12% in June.

At 81%, the average loan to value ratio (LTV) for a first time buyer edged above 80% for the first time in over three years. This is in contrast to home movers, with borrowers in July taking out 69% of the properties value, compared to an average of 70% observed for almost a year.

However, David Brown, commercial director of LSL Property Services, pointed out that mortgage market conditions remain constrained. 'Although it was encouraging that the average LTV for first time buyers ticked up in July, lenders continue to take a cautious approach to new lending. The number of loans to first time buyers in July was lower than June, and remains just 53% of the figure seen in July 2006,' he said.

'We’re yet to see the effects of the Funding for Lending Scheme filter in, and the New Buy scheme is still finding its feet. However, it’s crucial that lenders use all the tools available to them to boost lending to credit worthy first time buyers, to help alleviate the growing pressure on the private rented sector,' he added.

Remortgage lending rose slightly in July compared to June, but was 20% down on the same period last year. Lending totalled £3.2 billion in July, up from £3.1 billion in June but still well short of the £4 billion advanced for remortgaging in July 2011.

‘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,’ said CML director general Paul Smee.

‘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,’ he added.

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