Toucan

New figures show that fewer people took out home loans in July, with analysts interpreting the data as a further sign that the housing market is slowing.

Over the month some 94,000 loans totalling £14.8 billion were issued to homebuyers, an eight per cent fall on the 102,000 mortgages approved in June, the Council of Mortgage Lenders (CML) said.

The number of home loans made to first-time buyers also dropped by seven per cent in July, with 32,400 mortgages granted to those taking a first step onto the property ladder.

According to the CML it is becoming increasingly difficult for first-time buyers to afford property, with the typical first-time buyer income multiple rising to a "record" 3.39 in July, up from 3.23 in the same month of the previous year.

The data shows that first-time buyers purchasing property in July had to commit an average of 19.7 per cent of their income just to pay for the interest on their mortgages.

Commenting on the data, CMLdirector general Michael Coogan said that it would be inappropriate to read too much into a single month's figures, as a slight fall in lending between June and July had been recorded over the past three years.

But he stressed: "The long-anticipated slowdown in the housing and mortgage markets may now be beginning to materialise."

Referring to the Bank of England's decision to keep interest rates on hold at 5.75 per cent last week, he added: "Both market conditions and sentiment are coming off the boil, and affordability is ever more stretched, but consumers should not expect any immediate easing in the financial pressures they face."

Meanwhile separate data released today suggests that buy-to-let investors are increasingly entering the property market, as tenant demand for rental property increases in the wake of the growing inability for would-be homebuyers to afford their own house.

The Royal Institution of Chartered Surveyors (Rics) said that 29 percent more of its members reported a rise, rather than a fall, in tenant lettings in the second quarter. That compared to 15 per cent more who reported a rise in the previous three months.

Rics spokesman Jeremy Leaf said: "Current economic uncertainty has created an ideal platform for buy-to-let investors to cash in on rising rental levels.

"Many would-be buyers have decided to wait and see how the interest rate cycle will affect the market," he added.

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