Gross mortgage lending falls 4% year-on-year: CML

The Council of Mortgage Lenders estimates that gross mortgage lending in August was £12.6bn, which was slightly lower than the previous month’s £12.7bn.

The figures, published today (20 September) show a 4 per cent drop from the £13.1bn recorded in August 2011.

Bob Pannell, chief economist at the CML, highlighted that although house purchase activity continues to be a little above year-earlier levels, the housing numbers “are far from strong”.

He said: “We expect to see stronger take-up of NewBuy over the coming months, helped by a concerted marketing effort by builders and the recently launched Funding for Lending Scheme, which has prompted reductions in NewBuy mortgage rates. Both factors should stimulate buyer interest.

“The Funding for Lending Scheme is a bold move that has the potential to greatly influence the course of the housing market over the next year or so. While not a panacea for all housing market problems, the scheme does offer the potential to improve the lending environment. Unfortunately, it will be towards year-end before any initial assessment of its impact can be reached.”

David Brown, commercial director of LSL Property Services, said: “Mortgage lending is still bouncing along the bottom, acting as an ongoing brake on purchase activity from those without substantial equity or the ability to buy in cash.

“The Funding for Lending scheme should make life easier for lenders to provide cheaper finance for those buying their first home, but we’ve yet to see its influence in the monthly lending figures, and the current level of lending is more reflective of lenders’ concerns over their balance sheets and exposure to the Eurozone crisis.

“However, the scheme will need to drive a drastic improvement in the number of first time buyers able to access cheaper finance if we are to see a lessening of pressure on the private rented sector.”