Mortgage market remains subdued in June

The average homebuyer put down a 22% deposit in June, up from 20% in May, according to the Council of Mortgage Lenders.

The majority of lending continues to be on conservative terms, as lending criteria have tightened in response to the shortage of funding and current market conditions.

The average first time-buyer borrowed 3.33 times their income, down from 3.35 in May. While the average home mover borrowed 2.94 times their income, down from 2.97 in May.

There were 18,100 loans to first-time buyers in June worth £2.3 billion, an 8% decline in volume and 9% decline in value from May. There were 29,100 loans to home movers worth £4.7 billion, down 9% in volume and value from May. The share of house purchase loans to first-time buyers and home movers remained stable at 38% and 62% respectively.

Gross lending decreased slightly to £23.6 billion in June, down 4% from May and 32% lower than June last year. The largest share of gross lending was remortgaging (44%) with 75,000 loans worth £10.3 billion in June. Loans for house purchase accounted for 30% of gross lending with 47,000 loans worth £7 billion.

Fixed-rate mortgages accounted for an increasing share of products taken out at 69%, up from 66% in May. This trend is likely to continue as fixed-rate prices have fallen in recent weeks in line with the decline in swap rates.

While all parts the mortgage market are suffering a reduction in business volumes, the majority of mortgages continue to be obtained through an intermediary. The credit crunch had a particularly marked effect in the first quarter of 2008, when there was an increase in the proportion of borrowers seeking the advice of an intermediary. In the second quarter of 2008, 78% of first-time buyers and 61% of home movers used an intermediary to obtain their mortgage.

CML head of research, Bob Pannell commented: "Mortgage lending activity remains relatively weak and will decline further in the coming months as a result of funding constraints and lower consumer demand.

"The majority of lending continues to be to people with larger deposits, which is prudent for borrowers and lenders in a slowing housing market."