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Figures from the Council of Mortgage Lenders show that in July gross lending in totalled £25.2 billion, with fixed rate deal mortgages are at their most popular for nearly six years.

Nonetheless, "July's growth in lending to individuals slowed from the recent trend," said British Bankers Association (BBA) spokesman David Dooks, “this could have reflected consumers waiting for the widely anticipated cut in interest rates."

Miles Shipside, Commercial Director of Rightmove, comments, “The belated but welcome drop in interest rates will be a real boost for sentiment in the market and a springboard for a better 2006.”

However, more than half of all mortgage lenders have failed to pass on the full Bank of England interest rate cut to borrowers, and those that haven't done so already look unlikely to do so in the future.

“How these things usually work is that if the lender is going to pass on the full cut they announce so fairly quickly”, Ray Boulger of John Charcol mortgage advisers.

Several lenders stated the rates on fixed mortgage deals from some providers had already started to drop in anticipation of the cut in interest rates earlier this month, while others argued that replicating the rate cut is not necessary because they did not pass on past increases.

A few lenders immediately reduced their rates, but others have held off cutting borrowing costs or have trimmed them by less than the bank's quarter of a percent.

Despite the rate cut anticipation and the increases in the take-up of fixed rate deals, the British Bankers Association (BBA) said that net mortgage lending by its own members slowed down last month.

Rightmove in its latest house price index has indicated that house sales have slowed down. The numbers of completed sales for the three months from April to June are the lowest since 1998. To improve the chances of achieving sales, many new sellers are adjusting their prices in an attempt to undercut the competition. Asking prices have now dropped by an average of 1.2% over the past two consecutive months.

Rightmove believe that the housing market is gradually recovering, but “there is currently too much unsold property still available to expect anything other than a continuation of static asking prices this year”.

Miles Shipside adds, “Sellers are finally becoming more realistic on their asking prices, which when combined with cheaper mortgages and rising wages, means that more buyers can now afford to enter the market.” He went on to point out that, “We still need more first time buyers for the long term health of the property market.”

Financial comparison site, Moneynet, puts the current first time buyers' average joint salary at £39,382, with an average mortgage amount required of £135,239 constituting a 66% borrowing on the cost of a property. This means that with sellers asking prices remaining static, or even falling, and wages gradually rising, for many potential first time buyers, there is an increase in the realistic prospect of getting onto the property ladder.

Halifax hoped that the interest rate reduction by the Bank of England would, "reduce mortgage payments as a proportion of gross income for the average new borrower from 20% to 19%, the average for the past 20 years and well below the 34% peak in 1990".

With the mortgage market especially competitive at present and rate comparison sources easily accessible, lenders who do not offer reasonable rates are liable to lose out. All this appears to be good news for buyers as Rightmove states, “there are now clear signs that the market is making sensible adjustments in prices to improve buyers' affordability.”

Richard lives in Edinburgh, occasionally writing for the personal finance blog Cashzilla and thinks “Half Man Half Biscuit” were a good band.

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