Mortgage lending falls but remains strong

The Council of Mortgage Lenders (CML) has published figures for August showing a 6% fall in gross mortgage lending by banks, building societies and specialist lenders, as compared with July.

In monetary terms, lending fell to £32.2 billion from £34.1 billion in July and was 3% down on the August 2006 figure of £33 billion.

The data, which is not seasonally adjusted, relates to a period when the money markets were turbulent but the pressures on credit were less pronounced than today.

September has seen a number of lenders withdraw products, amended their lending criteria and raise interest rates.

At the same time, some lenders have reduced the rates on their fixed rate mortgage products.

The CML is cautious about making predictions for September lending, although it believes the evidence so far points to the market remaining strong.

According to the council, some decrease in the supply of lending is being experienced in the short term, as a result of problems in raising wholesale credit.

However, the Bank of England’s decision this week to inject an initial £10 billion into the money markets may help the availability of funding.

The British Bankers Association (BBA) has also published its mortgage lending figures for August, revealing underlying growth of £6.1 billion during the month.

The rise topped the £5.8 billion recorded in July and is ahead of the BBA’s monthly average growth figure of £5.4 billion.

Discuss this in the Finance Markets forums

Story link: Mortgage lending falls but remains strong