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Mortgage lending jumps 15%

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by Gill Montia

Gross mortgage lending increased in June, to an estimated £13.1 billion, with the total up 15% on a month earlier and 7% year-on-year, according to the Council of Mortgage Lenders (CML).

During the second quarter of the year lending stood at around £35 billion, having risen 17% compared with the previous three months and showing an annual increase of 7%.

However, total gross lending during the first half of 2010 remained unchanged on a year earlier, at £65 billion.

CML economist, Paul Samter, says June’s seasonal pick up is still indicative of low levels of activity and he is expecting transaction levels to stay subdued as long as mortgages funding remains tight.

Furthermore, the economist warns that proposed new measures on responsible lending from the Financial Services Authority (FSA) could make it harder for homemovers and first-time buyers to access credit.

Last week, the FSA made it clear that it wants to make lenders ultimately responsible for assessing a consumer’s ability meet their mortgage payments, verifying borrowers’ incomes in every case.

The proposals are based on the regulator’s analysis of the causes of arrears and repossessions.

Shockingly, the study revealed that between 2007 and the first quarter of 2010 almost half of new mortgages were provided without verification of income.

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News posted: July 20, 2010

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