Gross lending estimated at £12.6 billion in August by council of mortgage lenders
Gross mortgage lending totalled an estimated £12.6 billion in August, according to the Council of Mortgage Lenders. This represents a decline of 13% from July's revised total of £14.5 billion, but a seasonal fall in lending activity in August is to be expected. Estimated gross lending in the month was 37% lower than last August's total of £19.9 billion.
Despite the seasonal decline in activity, underlying lending levels appear to have stabilised during the summer, with stronger lending for house purchase balanced by lower levels of re mortgaging. This trend is unlikely to change for the rest of this year, with a pick-up in housing market activity checked by continuing funding constraints and a lack of ability or incentive to re mortgage.
Market developments continued to move in line with expectations over the last month. The housing market has shown further signs of improvement, with a range of evidence suggesting that it is in far better health than around the turn of the year. House prices have risen over the course of the summer. Estate agents are now reporting a rising trend, supporting data from most of the price indices. And activity levels continue to pick up, with house purchase mortgage approvals rising for the sixth consecutive month in July to the highest level since April last year.
But we remain wary of how much further this can go. Some of the firmness in house prices has been driven by a lack of properties coming onto the market. Potential movers might have been reluctant to sell at lower prices, while there was anecdotal evidence of some choosing to rent their homes. RICS has recently reported more sellers, which could alter the balance between supply and demand.
Some commentators have warned of the possibility of a period of renewed weakness. The Ernst & Young ITEM Club predicted a modest fall in prices over the first half of next year, describing the recent bounce as unsustainable and driven by a lack of supply and cash-buyers who have a limited supply of funds. ITEM predicted that the lack of mortgage finance and a reluctance to commit to significant purchases while the outlook for employment remains fragile will weigh on the market.
This was highlighted by negative net lending figure for July, showing that mortgage repayments outstripped new lending for the first time on record. Despite press comment to the contrary, it is not predominantly a sign that households are repaying more - underlying repayments are broadly steady. It is more indicative of the low levels of new lending currently taking place. Please see our recent News & Views article for a more detailed explanation. Our estimate for gross lending of £12.6 bn in August shows lending volumes remain subdued and that another negative seasonally adjusted net lending figure is possible.
The likelihood of a significant pick-up in lending remains weak, but the prospects for wholesale funding markets are improving. This could result in a gradual easing in constraints on the supply of funding over time. However, demand from consumers and a prudent approach to lending criteria are likely to mean that the market remains subdued.
the council of mortgage lenders provide full information and help regarding mortgage in uk and further a very simple
Mortgage Guide
Worried about your mortgage
Adverse credit mortgages
BY THE COUNCIL OF MORTGAGE LENDERS
| 
