The value of remortgage lending in the three months to August was 24% lower than a year ago, whereas house purchase lending was 6% higher, said the CML.
However, according to HMRC data, housing transactions totalled 93,000 in August – the strongest monthly outturn for nearly three years. Meanwhile, the Bank of England’s credit conditions survey showed availability of secured credit to households, including mortgage lending, increased significantly in the quarter to September, in contrast to previous expectations for little change.
CML chief economist Bob Pannell said: “There have been hints of demand softening over recent months, but monthly patterns may have been distorted by the Olympics. House purchase demand failed to lift significantly in the third quarter, despite much better mortgage availability. Remortgage activity continued to languish, in contrast to relatively strong levels a year ago.”
The CML added that a durable recovery in housing market sentiment may not be seen until late next year, with the latest MPC minutes noting that inflationary pressures might pick up again later this year on the back of anticipated rises in food and fuel bills.
Brian Murphy, head of lending at Mortgage Advice Bureau, added: “The September lending figures refer to completions which were hit by the usual summer lull and the effect of the London Olympics. In contrast, MAB found mortgage applications actually increased last month, up 1.9% on August.
“Application activity has been boosted by increased availability of competitive mortgage deals and the launch of the Funding for Lending Scheme, so a number of lenders have now begun to engage with the higher Loan to Value sector again. Nevertheless, we still need to see more lenders moving up the LTV curve before there will be any sizeable increase in housing transactions.”
