21 Sep

Summer drop in Mortgage lending

 

Mortgage lending fell by 13% in August on the previous month, according to the Council of Mortgage Lenders(CML).
The CML said UK gross mortgage lending totalled about £12.6bn, down from July's revised total of £14.5bn.
Mortgage lending, sales and house prices have all picked up this year, although from a very low level.
And the Bank of England has warned that lenders are still cautious about the sustainability of this apparent revival in the housing market.
"There has been no increase in the proportion of lending accounted for by mortgages with loan to value ratios (LTVs) of greater than 90%," said the Bank's latest "Trends in Lending" report.
"The major UK lenders remained cautious about prospects for house prices and unemployment," it added.
But the Bank reported that lenders were now approving just over 80% of new mortgage applications, up from 70% at the start of the year.
'Stabilising'
The CML in its latest report said a seasonal fall in lending activity in August "is to be expected" and underlying lending seems "to have stabilised during the summer".

Gross lending in the month was still more than a third down on the August 2008 figure of £19.9bn.
"The likelihood of a significant pick-up in lending remains weak, but the prospects for wholesale funding markets are improving," said CML economist Paul Samter.
"This could result in a gradual easing in constraints on the supply of funding over time.
"However, demand from consumers and a prudent approach to lending criteria are likely to mean that the market remains subdued," he added.
'False dawn'
The past few months have seen increasing evidence that the property market has been recovering, albeit slowly, from the dramatic slump it suffered in the aftermath of the credit crunch and international banking crisis.
This week surveyors reported that house prices had started rising for the first time in two years.
And the National Association of Estate Agents (NAEA) said that first-time buyers had returned to the market.
The CML said the stronger lending for house purchases is being balanced by lower levels of remortgaging.
This trend is unlikely to change for the rest of this year, it said, with a revival in housing market activity counterbalanced by continued "funding constraints" and a lack of ability or incentive to remortgage.
Earlier this week, the Ernst & Young Item Club, an economic forecasting group, argued that the revival in mortgage lending had been largely due to parents lending money to their children for house purchase.
It warned that revived property values were a "false dawn" and would not return to their 2007 peak for at least another five years.
"The underlying problems stifling activity in the property market remain the same - buyers are still having to find large deposits and lenders are being very selective with regards to those who are in a position to buy," said Brian Murphy, of mortgage brokers the Mortgage Advice Bureau.