Mortgage lending rises but remains subdued

Published 21st Aug 2009

Gross mortgage lending rose by 26% in July to an estimated total of £16bn, the Council of Mortgage Lenders (CML) said today.

The group attributed the uplift to seasonal house purchase activity, although lending was still 36% lower than last July's figure of £24.9bn.

There have been recent signs of improvement in the mortgage market, with the number of approvals for house purchases rising to its highest level in more than a year last month, according to Bank of England figures.

But the increase in lending remains well below the high it reached at the top of the property market – the CML figure for gross lending is the lowest July figure since 2001.

CML economist Paul Samter said: "Most of the indices point to house prices rising modestly over the summer months. July's gross lending estimate is the highest level in nine months and consistent with the rise in house purchase approvals.

"But the bounce-back in activity from the extreme weakness around the turn of the year, coinciding with a seasonal bounce, is limited in how far it can go against the current backdrop. We expect improved sentiment to support the market, but a further significant pick-up is unlikely with so many obstacles in place."

The CML said its forecast for gross mortgage lending of £145bn remains unchanged. "We anticipate some seasonal slowing in lending volumes and housing transactions over the latter part of the year and the picture of a slow but more stable market to emerge," Samter added.

Source: ' Guardian '

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