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Boost in mortgage lending in June
There was a 16% rise in mortgage lending last month, but a fall is expected over the summer
Mortgage lending rose by 16% in June compared to May, with an estimated £20.7bn lent to borrowers, but activity is likely to ‘soften’ in the next six months, according to the Council of Mortgage Lenders (CML).
The growth in lending, which represented a 3% year-on-year increase, saw last month become the highest June lending tally in eight years following £22.6bn in 2008.
Henry Woodcock, principal mortgage consultant at IRESS, said: “The positive indicators were there if one looked beyond the rhetoric of the daily bombardment of contradicting referendum messages. Mortgage lenders stayed calm, rates stayed low and many lenders looked to build market share with competitive deals.”
Trouble ahead?
However, the second quarter of the year saw lending fall 10% on the first three months of 2016, and CML senior economist Mohammad Jamei said that Brexit would have some effect on the housing market but to what degree, remained uncertain.
“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,” he said.
“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.”