Mortgage lending increased by a third in May

| July 12, 2012 | 0 Comments

Mortgage lending showed a “healthy improvement” in May despite continuing economic uncertainty and problems in the eurozone.

The Council of Mortgage Lenders (CML) reported a 33 per cent increase in
the number of new loans granted to home buyers, compared with the previous month.

48,300 new home loans were granted in May 2012, an increase of nearly a quarter compared with May 2011.

The improvement follows a slump in mortgage lending after the reintroduction of 1% stamp duty on properties worth between £125,000 and £250,000 on 24 March.

Many first time buyers had rushed to complete their property purchase before the stamp duty holiday ended.

Commenting on the latest figures Paul Smee, director general of the CML, said: “Lending is similar to late 2011 levels and showing a healthy improvement on the same time last year.

“However, the problems in the eurozone have not gone away.

“Economic uncertainty could affect both the supply of mortgage lending and consumer confidence and we still anticipate a challenging lending environment for the rest of the year.”

Meanwhile, mortgage lender GE Money Home Lending has warned potential mortgage applicants that they could be refused a mortgage if they have taken out a payday loan in the last three months.

Applicants who have taken out two or more payday loans in the past years could also be turned down, even if the loans were repaid on time.

Mortgage lenders may consider a payday loan to be an indication that the customer is having difficulty making their income last from one month to the next.

Although GE Money Home Lending is the only lender to specifically exclude payday loan customers, taking out a short-term, high interest loan is likely to have a negative effect on other lenders’ confidence in an applicant’s financial position.

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