However, the results increased by £1 billion from the August 2006 results, the CML indicated in its lending figures.
Figures suggested that lending for both house purchases and remortgage fell between August 2006 and August 2007, by 11 and 12 per cent. However, the market remained buoyant as a result of the growing buy-to-let market , with ‘other lending’ rose by 37 per cent from the August 2006 results.
The CML in its study into affordability indicated that the first-time buyer situation had continued to worsen, with FTBs, on average, borrowing 3.38 times their income, with the proportion they spend on interest rising to 20 per cent.
Michael Coogan, director general at the CML, said: “We are set to have a very segmented market for some months to come. The non-conforming sector is still facing funding constraints, while mainstream fixed rate deals have begun to get cheaper.”
The study also showed that fixed rate deals accounted for 78 per cent of mortgages in August, up from 59 per cent in August 2006. The CML attributed this rise to the current market turmoil affecting the mortgage sector.
Coogan added: “As lenders move to price for the risk they are taking on, mortgages are set to become more expensive for customers who have poorer credit histories.”
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