The Bank of England’s (BoE) Trends in Lending report revealed optimism had been driven by perceptions of an improved outlook for the economy and house prices. The Bank added that lenders’ appetite to lend may also be supported by a reduction in arrears.
Michael Coogan, director general of the Council of Mortgage Lenders (CML), said: “Funding conditions remain challenging, despite the encouraging signs of a slight thaw in wholesale funding markets.”
Coogan said the report confirmed its assessment of market prospects. He added: “The most likely scenario is a slow and long-drawn out recovery.”
The report follows the release of the CML’s statistics for the third quarter of the year, which revealed gross mortgage lending rose by 18% on Q2, a sign of an improving housing market.
Gross lending hit £38.9bn for Q3 and totalled an estimated £12.5bn in September, a 2% rise from the £12.3bn recorded in August.
The figures revealed that a pick-up in house purchase activity had been offset by a decline in
remortgaging.
Paul Samter, economist at the CML, said house buying activity was running at considerably higher levels than at the start of the year.
However, he warned: “It remains weak on any historic comparison and is unlikely to rise much
further given the constraints the lending community faces and a still difficult economic backdrop.”
David Whittaker, managing director of Mortgages for Business, added: “The market is still looking for more positive product positioning by lenders to encourage purchase activity.”
