Mortgage lending levels have continued to break records with another rise in May, according to the latest survey of mortgage lenders carried out by the CML/DETR.
Total gross mortgage lending climbed to £12.9bn in May from £12.6bn the previous month and £10.1bn in May 2000. The amount of lending for both house purchase and remortgages increased, with loans for house purchase up to £8.1bn, and remortgage business climbing to £3.9bn.
The continued increase was attributed to the base rate cut made in May, causing the average new mortgage rates to come down further. The average new variable rate was 5.32% compared with 5.53% the previous month and the average new fixed rates stood at 5.95%, down from 5.99%. In May, 70% of new loans were taken out on a variable rate basis.
Michael Coogan, director general at the CML, said: ‘Remortgaging continues to run at high levels as consumers take advantage of lower interest rates. But, we estimate that lending for house purchase rose even more dramatically in May, to its highest ever monthly level. But the wider picture may mean the MPC’s next move in interest rates is upwards.’
New mortgage lending by the Building Societies Association (BSA) totalled £2.17bn in May, up from £1.99bn in April.
Gross mortgage lending by the British Bankers’ Association (BBA) mirrored this growth with a 14% rise to £9.32bn in May. Ian Mullen, chief executive of the BBA, said: ‘Lending of over £9bn reflected an increase in the banksš market share to nearly three-quarters of all new lending. Approvals of loans showed there was further strength to come from people moving home, as more than 3,000 loan applications were granted each day in May.’