Gross mortgage lending up 24% in May, CML

Gross mortgage lending in May rose to an estimated £12.2bn, according to the Council of Mortgage Lenders.

This represents a 24 per cent rise from £9.9bn in April and a 13 per cent rise from £10.8bn in May 2011.

Bob Pannell, chief economist at the CML, said: “The government has recently announced a number of measures to counter the adverse effects from the eurozone crisis. It clearly senses an opportunity to bolster home ownership and housing activity, and we look forward to hearing more details about the “funding for lending” initiative which seeks to deliver this.

“Meanwhile, mortgage lending continues to seesaw, albeit against a broadly flat market. Unfortunately a number of one-off factors such as the Diamond Jubilee and the Olympics are set to distort market indicators over the coming months.

“It may be the autumn before we can more accurately gauge the state of the market.”

Paul Hunt, managing director of Phoebus Software added that the annual growth in lending is “really significant”.

He said: “In a year in which a European nation has partially defaulted and appeared set to leave the eurozone altogether and in which the UK slid back into recession, that mortgage lenders have managed to achieve a substantial increase in their activity is testament to the innovative and proactive approach they have taken.

“In spite of the absence of economic growth and amid growing fiscal hurdles in the property market, the lending industry has found a way to sustainably and significantly boost activity in the property market”.

Michael Coogan, strategic adviser at Deloitte’s financial services practice, said: “The bounce back in gross lending in May is a welcome sign that borrowers are still keen to transact. The new funding for lending scheme should provide new opportunities for consumers to access the market in an affordable way.

“While short-term lending trends are difficult to call, the market improvement in 2012 is set to continue.”