The CML predicted that gross lending will rise to £209bn in 2015, 3% higher than in 2014, as July’s figures increased by 9% on the previous month and 14% higher than the same time last year.
Industry experts said low mortgage rates combined with increased competition in the market had helped boost figures in what would normally be a quiet month for lending.
Mohammad Jamei, CML economist, said: “At £22bn, our estimate of gross lending in July is the highest monthly total for seven years, but is in line with our expectation that lending would strengthen in the second half following subdued activity earlier in the year.
“We expect lending activity in the rest of the year to be underpinned by improving economic fundamentals, but kept in check as any upward pressure on house prices further stretches affordability for some buyers.”
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), warned that affordability constraints would remain a concern for borrowers.
“The outlook for the second half of 2015 certainly looks positive, with an improving economic backdrop encouraging greater activity in the mortgage and housing markets,” he said.
“However, affordability concerns will be at the front of people’s minds and threaten to limit the recovery. Even with a modest interest rate rise, there is little prospect of house prices calming down unless the number of new homes on the market starts to catch up with demand.”
Andrew Montlake, director at Coreco Mortgage Brokers said: “I suspect the pattern is set for the rest of the year now with a busy last quarter forecast as lenders desperately try to hit end of year targets they seem to be falling short of. Another rate war seems to be brewing as competition hots up once more.
“However, many prospective borrowers are still finding the lending market tough and lenders need to start to relax some of the overly tough criteria that has come into play since the mortgage market review. This is starting to happen gradually and I suspect this will continue in order to re-engage certain sections of the lending market such as interest only, older borrowers and the self-employed.”
