August boost for mortgage lending
Mortgage lending reached £22.5bn in August, according to The Council of Mortgage Lenders – 7% higher than July’s lending total of £21.1bn.
In addition to the month-on-month rise, lending rose 15% year-on-year, from £19.5bn in August 2015. This is the highest August figure since 2007 when gross lending reached £33.6bn.
CML senior economist Mohammad Jamei said: “Widely voiced fears in recent months about the housing market have proved to be wide of the mark. Prospects for house purchase activity post-referendum look slightly subdued, when compared to late 2015 and early 2016. However, sentiment in the market recovered in August. This is reflected in stronger-than-expected transaction figures, and in our gross lending estimate.”
The recovery is due to a number of different factors, not least the Bank of England’s monetary stimulus and its introduction of the Term Funding Scheme in August.
Jamei noted: “A further rise in mortgage approvals is anticipated, albeit still at levels lower than earlier this year as affordability constraints and lack of properties on the market for sale continue to bear down on borrowers. The Bank also continues to indicate another rate cut on the cards, if medium term prospects remain unchanged.”
Henry Woodcock, principal mortgage consultant at IRESS, added: “The market bucked the indicators that would have suggested a drop in lending.
“If there are no unforeseen bumps in the economy, the optimist in me – encouraged by these figures – would expect mortgage approvals and advances to increase further over the coming months – but at lower levels of growth than in 2015 – as lenders seek to hit end of year targets.”