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C M L: Mortgage Lending Down 30% Compared With December

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Mortgage lending bounces back - for now

10:16, Wednesday 14 July 2010

Mortgage lending to people buying a home bounced back during May but is expected to remain subdued for the rest of the year.

About 42,000 home loans were advanced to people buying a property during the month, 2pc more than in April, when lending levels dipped by 9pc, according to the Council of Mortgage Lenders.

But the figure was still down on the recent high of 63,000 mortgages reached in December when people buying lower value properties rushed through transactions before the stamp duty holiday ended.

The total amount lent for house purchase also rose year-on-year for the 11th consecutive month, with £6 billion advanced, 28pc more than in May 2009.

But the figure was nearly 30pc down on December's, and the CML warned that a combination of the challenging economic backdrop, government spending cuts and rising taxes meant year-on-year lending increases were likely to "tail off" during the second half of the year.

The group said monthly comparisons with a year earlier were likely to be flat or negative in the coming months, due to the strong lending levels seen in the second half of 2009 as people rushed to take advantage of the stamp duty holiday.

Michael Coogan, director general of the CML, said: "House purchase lending continues its recovery but positive comparisons with equivalent months a year ago look unlikely to continue.

"Activity picked up in the second half of 2009 due to the stamp duty holiday but with the Government's austerity drive picking up momentum we are unlikely to see a repeat of those buoyant numbers this year."

He added that the group's forecast that total advances would reach £150 billion during 2010 was now beginning to look a "little optimistic".

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