Mortgage lending 24% higher in May
Mortgage lending increased by 24 per cent to £12.2 billion in May, after a fall in April, according to the Council of Mortgage Lenders (CML).
The figure was 13 per cent higher than a year ago.
However, when the effect of the end of the stamp duty holiday on first-time buyer properties is excluded, the market is broadly flat, the CML warned.
The property market slumped in April after stamp duty was reintroduced on properties worth between £125,000 and £250,000, on 24 March.
Along with mortgage lending, home sales also rebounded in May according to HM Revenue & Customs which reported an increase from 64,000 in April to 71,000.
The outlook for the property market is difficult to predict, the CML said.
Its chief economist Bob Pannell Bob Pannell commented: “Unfortunately, a number of one-off factors, such as the Diamond Jubilee and the Olympics, are set to distort market indicators over the coming months, and it may be the autumn before we can more accurately gauge the state of the market.”
At its annual lunch today, the CML’s chairman Martijn Van der Heijden said that the UK mortgage industry must pull together for the good of the housing market and its customers.
It must focus on confidence, quality and skills, Mr Van der Heijden said, and called for a move away from a sales culture to a service culture.
The government and the Bank of England have announced a ‘funding for lending’ scheme which could lead to an improvement in the mortgage market.
The £80 billion scheme will provide banks with funding at lower interest rates than wholesale financial markets.
In return for the funding banks will have to increase their lending to individuals and small businesses, which should improve the supply of mortgages.
The four-year scheme should be in place within the next few weeks.