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Wednesday 24th of June 2009
June 18, 2009

Gross lending dips as remortgaging continues to decline


by Gill Montia
”Gross

Gross mortgage lending declined slightly last month, falling to £10.3 billion in May from £10.5 billion in April.

The 2% decline took the annual fall to 58%.

The new figures from the Council of Mortgage Lenders (CML) include lending for house purchases and remortgages and the Council points out that even if house purchase activity is increasing, the rise will not be fully reflected in the overall total.

This is because remortgaging has fallen away in recent months as borrowers coming to the end of fixed-rate deals remain on lenders’ standard variable rates (SRVs).

With the base rate at 0.5%, some SRVs are attractively low but borrowers are also being excluded from the remortgaging market by poor credit histories and small amounts of equity in their homes.

The Council therefore considers it likely that a “moderate” improvement in house purchase lending occurred last month.

Commenting on the market, CML economist, Paul Samter, says he is not expecting a significant recovery in activity in the coming months despite recent encouraging signs.

According to Mr Samter: “Lending volumes appear to have stabilised at extremely low levels, but the weak labour market and lenders’ limited access to funding will constrain activity for some time yet.”

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