Mortgage lending falls in May after April recovery

It seems that the slight recovery in mortgage lending in April was a bit of a false start, as we have news that mortgage lending has fallen in May. This news was provided by Council of Mortgage Lenders (CML). Although lending is only down slightly in May, the overall gross mortgage lending is down by almost a fifth on the same time last year, and this looks to only be getting worse.

Gross lending in the month of May only pulled in £25.5bn, compared to £26.1bn in April, although this is slightly up from the £24.1bn in March. When you look at the lending figures on an annual basis, lending is down by 19% percent this year alone, May of last year saw gross mortgage lending at £31.5bn.

Council of Mortgage Lenders (CML), director general, Michael Coogan, said “The remortgage market remains on track to meet our forecast for growth this year, demonstrating the resilience of the market despite recent bad news.” He also added “However, by comparison, the next few months will remain very weak for house purchase activity for the funding reasons which are now well rehearsed. We still await first signs of the Bank of England’s Special Liquidity Scheme indirectly helping to ease the current logjam.”

Many experts believe that house price will fall even more over the course of the year, and with the recent speech from Bank of England Governor Mervyn King, predicting that the economy will worsen, these mortgage lending levels look set to fall even further.

Source