Around 25,000 remortgage loans were advanced by lenders in August – worth an estimated £3bn.The number of loans was down 13% and the value down 14% from July, a drop of 19% compared to the year before.

There were 51,600 house purchase loans in August 2010, a fall of 8% compared to July.

In contrast against last year, purchase loans saw an increase of 3% in volume and 12% by value from August 2009, showing that lenders are still more active this year than last.

CML director general Michael Coogan said:

“August is a traditionally slow month for mortgage lending and it was no different this year. While we do not know what the impact of the comprehensive spending review will be on our sector, it will clearly contain austerity measures that will likely further dampen consumers’ appetite to borrow.”

Sponsored

He added: “We would expect lending to slow more significantly, year on year, as we head towards the end of the year, and it is unlikely that the uncertain environment will encourage a tick up of mortgage activity in 2011.

“With some uncertainty surrounding future house price trends, we would expect a muted market in the next few years. The problem of excess capital, that led to record lending and borrowing in 2007, has self corrected and will not return.”

The survey also revealed that 18,300 loans were advanced to first-time buyers in August, which represented a decline of 5% by volume and 4% by value.

First-time buyer loans were also down 3% by number, but up 5% by value, compared with August last year.

Homemovers suffered more than first-time buyers from the summer lull in August with the 33,200 loans advanced down 10% on July, and average deposits up from 33% in July to 34%.

This saw movers in August borrowing at the lowest loan-to-value ratio for six years. However, in terms of lending levels there was some improvement on a year ago, with homemover loans 7% up by volume and 13% up by value from August 2009