Mortgage lending shows August dip

| September 18, 2009 | 0 Comments

Mortgage lending showed a seasonal dip in August, registering a 13% decline on July.

New figures from the Council of Mortgage Lenders (CML) estimate gross lending for the month at £12.6 billion, compared with a revised total of £14.5 billion a month earlier.

The fall stands at 37% when compared to gross lending of £19.9 billion in August of last year.

Reflecting on the data, the CML says “underlying lending levels appear to have stabilised during the summer, with stronger lending for house purchase balanced by lower levels of remortgaging”.

The body goes on to warn that little change should be expected during the remainder of 2009, “with a pick-up in housing market activity checked by continuing funding constraints and a lack of ability or incentive to remortgage”.

CML economist, Paul Samter, comments: “The likelihood of a significant pick-up in lending remains weak, but the prospects for wholesale funding markets are improving.”

He adds that “demand from consumers and a prudent approach to lending criteria are likely to mean that the market remains subdued”.

While a summer dip is only to be expected, the CML’s figures come alongside predictions that the UK’s recent housing market rally is all but at an end.

Earlier this week, Ernst & Young Item Club warned that the price rises seen in recent months are a false dawn.

The economic forecasting group believes that the average value of a home will fall next year and not revisit its 2007 peak for at least another five years.

In addition, real estate and investment management firm, Jones Lang LaSalle (JLL), is forecasting significant price falls over the next 18 months, as the market makes a W-shaped recovery.

In this scenario, JLL expects prices to remain flat in 2009, drop by around 7% in 2010, and only begin a sustained recovery in 2012.

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