Mortgage lending up and down

Mortgage lending reached high levels in June but is now showing signs of slowing down.

According to the Council of Mortgage Lenders (CML), June lending was at its highest since November 2006, at £34.2 billion, but the figures include a large number of people who were re-mortgaging after their fixed-rate mortgage terms had come to an end.

Taking these borrowers out of the equation, mortgage lending in June was only 9% higher than it had been in May, as compared with an increase of 12% in June in 2006 and a 15% increase in June 2005.

The British Bankers’ Association is in agreement that there has been a slowdown in the mortgage market.

The major banks increased net lending by £5.06 billion during June, compared with £5.83 billion in May. The recent monthly average stands at £5.3 billion.

According to the Building Societies Association net lending reached £1.18 billion in June, down from £1.89 billion in June of 2006. Approvals for June dropped to £4.69 billion, compared with £6.05 billion in the same period of 2006.

The CML expected to see strong levels of lending continue into the autumn of this year but believes that mortgage applications will show an increase in the number of people re-mortgaging their homes and a decrease in those borrowing to move house.

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