CML: Mortgage lending higher in August
The Council of Mortgage Lenders (CML), which represents lenders who offer around 94% of all residential mortgage lending in the UK, has today reported UK mortgage lending grew in August.
According to the Council, lending was 6% higher in August on a monthly basis, attributed to seasonal factors.
The figures come after July saw a slump of 6% in mortgage lending compared with a year ago.
Gross mortgage lending came in at £13.4 billion last month – a 10% increase compared with August 2010 – the highest monthly total since July 2009, when mortgage lending rose to £14 billion, the CML said.
Commenting on today’s figures, Bob Pannell, director-general of the CML, said: “Activity levels … continue to be subdued but broadly stable. The August performance more or less offset the weaker-than-expected July figure. Taking July and August together, lending has shown little change on the same months of 2009 and 2010.”
First-time buyers have to put down an average deposit of 20% in order to secure a mortgage, according to the Council, and therefore approvals are running at around half the level seen prior to the financial crisis.
As a result, August’s good performance has been greeted with caution by experts and many believe the market remains muted.
Howard Archer, chief UK economist at IHS Global insight, cautioned that although activity within the housing market had improved of late, it is still low compared to “long-term norms”.
For that reason, he believes house prices are likely to fall by around 5% overall from current levels by mid-2012.
He adds that consumer confidence is low due to uncertainty surrounding the economy and therefore buyers are adopting a wait and see approach.
In related news last week, the Royal Institution of Chartered Surveyors (Rics) reported that the UK housing market remained weak in August with house prices falling further.
The Rics report said 23% of surveyors reported house prices fell rather than rose – this reading has been in negative territory for more than a year.
Meanwhile, surveyors remain negative about the direction of future house prices with 23% more surveyors expecting prices to fall rather than gain over the next quarter.