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Wednesday 03rd of February 2010
October 20, 2009    

Gross mortgage lending nudges up 2%

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by Gill Montia

The Council of Mortgage Lenders (CML) has reported that gross mortgage lending totalled an estimated £12.5 billion in September, nudging up 2% from £12.3 billion in August.

The figure is still 27% down on a year earlier but puts gross lending in the third quarter of 2009 at around £38.9 billion, an 18% rise on the previous three months.

The latest quarterly figure is, however, down 36% on the same period of 2008.

The Council attributes the “modest improvement” and “relative stability” of the UK housing market in recent months to a rise in house purchase activity.

However, in terms of mortgage lending, this has been off-set by a decline in remortgaging as borrowers coming off fixed rates opt to remain on their existing lenders’ standard variable rates.

CML economist, Paul Samter, observes that while house buying activity has improved since the beginning of the year, it remains weak on any historic comparison”.

He is therefore predicting that it is unlikely to rise much further “given the constraints the lending community faces and a still difficult economic backdrop”.

However, Mr Samter acknowledges some positive signs that the wholesale markets, which finance the mortgage businesses of banks and building societies, have begun to thaw.

Investors are once more showing interest in residential mortgage-backed securities (RMBS), which have been blamed for much of the bad debt that sparked the credit crisis.

Nationwide has recently announced plans to raise cash through an issue of RMBSs, following on from Lloyds Banking Group which last month placed its first issue of mortgage-backed bonds in over a year.

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