7% rise in mortgage lending
Mortgage lending rose by 7% during May but remained well down on levels seen at the end of 2009, figures showed today.
A total of £11.3 billion was advanced during the month, up from £10.5 billion in April and 10% higher than the amount lent in May last year, according to the Council of Mortgage Lenders.
But the figure was still well below the £13.6 billion advanced during December, when the market received a boost as people buying lower value properties rushed through transactions ahead of the end of the stamp duty holiday.
The CML said the mortgage market remained subdued, and total advances during 2010 may "marginally undershoot" its current forecast of £150 billion.
Lending levels have been hit by a drop in activity in the housing market since the start of the year due to a combination of bad weather, the end of the stamp duty holiday and uncertainty caused by the General Election.
But some commentators have argued that the fall in activity cannot be explained by these one-off factors alone, but actually indicates that the house price recovery seen in 2009 is running out of steam.
The CML said that, while it did not expect next week's emergency Budget to include any specific housing and mortgage tax measures, the market would be affected by the impact policy had on the wider economy, particularly in terms of household finances and confidence.
It added that reforms to the way the financial services sector is regulated further contributed to the uncertainty.
The Bank of England also released figures today showing that total mortgage advances and loan approvals for house purchases "picked up" during May.
The Trends In Lending report said remortgaging activity remained low during the month, though lending to those buying a property was higher than at the beginning of the year.
Lenders expect mortgage market activity to be "broadly flat" in the coming months.
The Bank said demand for housing, particularly among first-time buyers, continued to be constrained by tight credit conditions, although there had been an increase in the number of mortgages available, including for people with deposits of less than 25%.
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