Here's our July review of the mortgage market and we're covering 3 hot topics. Interest rates seem to be continually in the news headlines with the Bank of England adding continuous increases on a regular basis - the base rate now stands at 5.75% after 5 jumps in the past year. Together with steadily increasing house prices, UK residents are now spending more on their mortgage payments than ever before - approximately 19% of household income on average.

A knock-on effect of the house price factor is the level of mortgage lending - this has reached a new record high according to the CML with lending in June 2007 totalling a record £34.2 billion. The CML said that the markets are expecting a further rate rise before the end of the year and with many people due to exit their short term fixed rate deals, people should be thinking carefully about how they are going to afford their next mortgage deal, whose payment figure may come as a bit of a shock, especially if they have had the benefit of a fixed rate deal for 2 or more years.

Talking about fixed rate mortgages, new statistics show that these types of mortgages are far and away the most popular at the moment, with an amazing 89% of first-time buyers and 73% of other home purchasers choosing a fixed rate deal in May 2007. Despite these fixed deals, mortgages are becoming less and less affordable according the CML, with the average home mover borrowing more that 3 times their annual income. Affordability is also being impacted by stamp duty, whose net is catching more and more people. In May 2006 52% of first-time buyers had to pay the duty, but this climbed to 60% by May 2007.

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