CML: Mortgage lending beginning to slow
A new report from the Council of Mortgage Lenders shows that mortgage lending is beginning to slow down. Lending was still up in May – at £31 billion, it was up 12 percent from April and 5 percent higher than last year at the same time. The figure is a record for May. However, the CML says, growth is slower than it was earlier in the year, when the annual rate of growth was at 12 percent to 15 percent. A separate report from the Building Societies Association reinforces the idea that mortgage lending is cooling off. That report shows that mortgage approvals – loans agreed to but not yet completed – were down 13 percent in May, compared to the same month last year.
Part of the slowing has to do with the cooling off of the housing market, where house price inflation has peaked out at 10 percent to 11 percent according to two different surveys. Another aspect of the slowdown has to do with the cost of borrowing, which has gone up with several interest rate hikes in the past year. The decline also seems to be part of general slowdown in borrowing, illustrated by a report from the British Bankers’ Association that shows credit card borrowing down and repayment of old credit card debt up. In May, the BBA said, people paid off more of their old debt than they spent on new credit card purchases.