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Mortgage Lending Up 21 Per Cent In May

The estimated figure for May is £14.7 billion, representing a rise of 21 per cent from £12.2 billion in April and 17 per cent higher than the £12.6 billion in May 2012.

CML chief economist Bob Pannell commented: “The imminent change of guard at the Bank of England takes place against the backdrop of a modestly improving UK economy, albeit one that appears to rest upon a pick-up in consumer spending and a recovering housing market.

“Funding conditions, helped by the funding for lending scheme, continue to look favourable and are supporting more competitive mortgage pricing and availability and a gradual resumption of lenders’ risk appetite.

“While the direction of travel is clear and fits well with the more positive housing surveys from RICS and others, our forward estimate does imply somewhat stronger house purchase activity than we had been expecting. This may reflect a degree of pent up sales following the extended spell of poor weather earlier this year.”

Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), said the figures were something of a double-edged sword.

He explained: “Firstly, with lending volumes up by 21 per cent between April and May, they show mortgage lenders are very much open for business and willing to compete over pricing for higher loan-to-value deals. Despite capital requirements curbing lending, borrowers’ chances of securing a low deposit mortgage are certainly improving.

“But let’s not forget that higher LTV mortgages are of limited use if property is in short supply and house prices are pushed even higher by the imbalance. We can take heart from improving conditions, but now is the time for a proper discussion involving government and industry on the future of housing policy in the UK. Otherwise, we may find a momentum building that slips out of our control.”

Paul Smith, chief executive of the estate agency haart, said: “At last lenders are doing what they should be doing, which is lending. Our branches are currently achieving 97.8 per cent of asking prices for properties, indicating that it is a good time to sell.

“Demand is high because, at last, lenders have been able to offer very competitive rates and a higher percentage of property value loans. Confidence is also back.

“However there are 13 per cent fewer properties coming onto the market than last year, so supply is short. The market needs prospective buyers to also put their own properties on the market rather than wait until having their own offer to purchase accepted. This will provide much needed fluidity and more choice of stock at all levels.”


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