Six per cent rise in mortgage lending

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New data from the Council of Mortgage Lenders (CML) shows that gross mortgage lending increased to approximately £32.4 billion in October.

The figure is 6% ahead of lending in September, at £30.6 billion, and 6% higher than in October of last year.

Historically, mortgage lending in September and October shows a seasonal rise of around 3%.

Although the October increase is well ahead, the figure reflects applications made and approvals given before the full impact of the problems of the wholesale money markets had been felt.

As a result, the CML expects mortgage advances to be “somewhat lower” during November and December.

This view is supported by data from the Bank of England, which shown the number of mortgage approvals declining during the third quarter.

Michael Coogan, director general of the CML, has stated that: “The next few months will be a testing time as ongoing pressures in financial markets feed through into the wider economy. Funding constraints will continue to restrict lending activity and make loans more expensive”.

However, he points out that “the Bank of England’s recent Quarterly Inflation Report reinforced the likelihood of a reduction in rates early next year, and that should provide some relief for borrowers sooner rather than later”.

Not all analysts would agree. There have been reports that in the current climate, mortgage lenders are likely to shy away from decreasing rates in line with a reduction in the base rate.


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