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Mortgage lending up 5%: CML

by: Mortgage Solutions
  • 19/11/2009
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Mortgage lending rose by 5% during October as the market continued to recover from its traditional summer dip, figures from the Council of Mortgage Lenders (CML) showed.

A total of £13.5bn was advanced during the month, up from £12.9bn in September, but still 27% below the figure for October last year.

The trade body said the 5% rise during October was in line with increases seen for that month during the past decade and was in line with its revised forecast for total lending of £141bn during 2009. It expects lending to slow down during the rest of the year due to seasonal factors in the run up to Christmas.

The CML said the steep year-on-year falls in mortgage advances were likely to reduce during the coming months.

Paul Samter, economist at the CML, said there has been a significant change in the type of lending taking place from the start of the year.

He added: “House purchase activity has picked up significantly. In contrast, remortgaging has dropped to decade-low levels as many borrowers have little incentive to refinance when they move onto low reversion rates, and others find themselves unable to do so due to equity constraints. The coming months are likely to be dominated by seasonal factors rather than underlying change.”

David Whittaker, managing director of Mortgages for Business, said the figures were more encouraging signs for the property market.

He explained: “The rise in gross lending reported by the CML today is not out of the ordinary for this time of year. Many borrowers are still unable to secure finance unless they have enormous deposits and we are entering the Christmas period so we can expect lending to slow considerably.

He added: “As the majority of potential first-time buyers toil to gain a scrap of finance they can’t get a foot on the ladder and need to rent for longer. We’re seeing more positive product positioning from lenders which will revitalise purchase activity.”

 

 

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