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Gross mortgage lending continues to rise

Latest estimates put gross mortgage lending at £20.7 million in June, representing a rise of 16% on May’s lending total of £17.8 billion.

Figures just released from the Council of Mortgage Lenders (CML) indicate that mortgage lending continues to rise. At £20.7 million in June, the month-on-month rise from May is 16%, while the year-on-year increase is at 3%, when compared to the £20.1 billion lent in June 2015.

June 2016’s lending figure is the highest seen since June 2008, when gross lending reached £22.6 billion.

The CML has therefore estimated gross mortgage lending for the second quarter of 2016 as being £56.1 billion. This equates to a 10% drop on the first quarter of this year, but an 8% rise on the second quarter of 2015.

Mohammad Jamei, senior economist, CML, said: “The result of the EU referendum is likely to affect the housing market, but there remains considerable uncertainty.

Although mortgage firms have ample lending capacity, activity levels are likely to bear the brunt of any market adjustment over the next six months or so, as buyers and sellers wait to get a clearer idea of where we might be headed.

“But as with the economy, the UK housing market’s starting position is relatively favourable, with transactions having increased by almost 80% from post-crisis lows. Over the next six months, activity is likely to soften modestly, while lending will be driven more by remortgaging and less by house purchases.

“We also expect some form of monetary easing to be undertaken by the Monetary Policy Committee when it meets on 4 August, given the uncertain outlook that has set in after the vote result.”

David Whittaker, managing director of Mortgages for Business, comments:

“Mortgage lending appears healthy, even expanding – for now. But the mortgage market is changing in nature, just as the UK property market is evolving. Remortgaging will be an increasingly important element of this total gross lending figure as many borrowers look for the certainty of a fixed rate, or the extra breathing space of a marginally better deal. Lenders will be hard-pressed to cut mortgage rates much further – but the odds of rising borrowing costs have also been lowered in recent weeks.

“Buy to let purchase lending could also benefit from current conditions, and from a new wave of tenant demand as many owner-occupiers postpone their own home purchases. Landlords investing in UK property this summer are likely to have done their homework having factored in tax changes and accounted for an environment of uncertainty.”


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