Mortgage market still subdued as lending takes a fall
A mini revival in the mortgage market fell away during July amid a "subdued" property market, the UK's major lenders said.
Gross lending was an estimated £12.6bn in the month, 1% lower than in June and 6% down on a year ago, the Council of Mortgage Lenders (CML) said.
Lending in June picked up to its highest level for nearly a year as landlord activity in the buy-to-let market picked up.
But July saw lending fall back and the underlying picture of the housing market now "looks stable at best", the CML said.
The organisation, whose members account for 94% of all residential mortgage lending in the UK, also warned that remortgaging, which has been propping up the housing market, continues to look positive for now but could be disrupted by the eurozone debt crisis, which impacts on wholesale funding markets.
CML chief economist Bob Pannell said: "Housing market conditions remain subdued, but pretty stable.
"Seasonal factors continue to provide some support, but underlying house purchase activity may drift lower over the coming months."
Richard Sexton, director of e.surv chartered surveyors, said: "July's subdued figures confirm that June was just a fleeting uptick.
"The banks are handcuffed by weak economic growth and concerns over their capital liquidity."
He added that banks are targeting borrowers with large deposits, while people seeking mortgages with large loan-to-value ratios were offered more restrictive rates.
"As a result, great swathes of lower income buyers are marooned in the rental market while the lowest rung of the property ladder hovers just out of their reach," he said.
But Chris Gardner, director of mortgage broker obligo.co.uk, said the figures represented good news for the economy because consumers were less inclined to take on large debts while those with mortgages were taking advantage of record low interest rates to pay down their borrowings.
He said: "With both a month-on-month fall and an annual drop in gross lending, the nation's mortgage debt mountain is slowly being whittled away.
"As consumers slowly shed their debt millstones, there's an outside chance that consumer confidence will improve."