The overall UK mortgage market continued to slow in July, according to the latest Housing Market Activity Report from Connells Survey & Valuation.

While the total number of residential valuations conducted during July rose by 8% compared to the figure recorded a year ago, the number of valuations fell by 13% compared to the previous month (June).

John Bagshaw, Corporate Services Director of Connells Survey & Valuation, said: “The UK’s mortgage market continues to feel the effects of the financial crisis across the channel and the ongoing economic recession. Lenders concerned about the impact of a deterioration in the eurozone have been concentrating on consolidating their balance sheets rather than new lending, putting the brakes on valuations activity.”

“Nevertheless, the launch of the government’s Funding for Lending scheme could well breathe new life into the housing market as the year progresses. If lenders grasp the opportunity for cheap finance with both hands, and pass this onto new buyers, we should see the housing market take a step towards recovery.”

Buy-to-let was the only section of the market not to shrink in July compared to the previous month, with the number buy-to-let valuations also seeing an annual growth of 31%. As a result, buy-to-let valuations now comprise 14% of Connells’ valuations, up from 12% in June.
John Bagshaw added: “The growth of buy-to-let comes as a side-effect of the historically subdued house purchase market. With far fewer first-time buyers than before the initial credit crunch, demand for rented accommodation is still growing, presenting investors with excellent conditions to achieve healthy yields. It’s no surprise that money is still pouring into buy-to-let and demand for finance is still climbing.”