Mortgage lending slows for third month running


Mortgage lending in the UK slowed for the third consecutive month in May, reaching an eight-year low, according to the British Bankers’ Association (BBA).


[UKPRwire, Sun Jun 28 2009] Mortgage lending in the UK slowed for the third consecutive month in May, reaching an eight-year low, according to the British Bankers’ Association (BBA).

The £2.3 billion growth for seasonally adjusted net mortgage lending in May represented the smallest increase since March 2001, compared to a £2.5 billion increase in April. A year earlier lending grew by £4 billion, said the BBA.

Gross mortgage lending also slowed in May, rising £7.7 billion compared to £7.9 billion in April. This decline was attributed by the BBA to “much weaker remortgaging in recent months”.

However mortgage approvals – which are a good indicator of future lending activity – rose for the second consecutive month to the highest level in 13 months, suggesting that the outlook may be improving. In May mortgage approvals totaled 31,162, up from 29,018 in April and from 26,903 one year ago.

Other housing-market indicators support the BBA data, with the Bank of England seeing mortgage approvals rise to an 11-month high in March, and the Royal Institution of Chartered Surveyors reporting a significant increase in buyer interest.

But overall the outlook for the housing market remains uncertain, as borrowers continue to hold off buying and are also being hit by mortgage restrictions. Michael Coogan of the Council of Mortgage Lenders said last month, "It’s still too early to spot a clear pattern of recovery in the housing market as some commentators have suggested. Activity remains weak, and we have said we will see volatility in monthly lending figures as we bounce along at the bottom of the market ."

In a similar vein, Paul Broadhead, head of mortgage policy at the Building Societies Association, said, “the rate of decline in activity in the housing market may have started to slow, but overall the lending environment remains very challenging".




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