MortgagesNov 20 2014

Lending at highest level since October 2008

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The Council of Mortgage Lenders estimates that gross mortgage lending reached £19bn in October, 8 per cent more than the £17.5bn in October last year.

The figure also represents the highest lending total for an October since 2008, when gross lending reached £18.6bn.

Mohammad Jamei, an economist at the CML, commented that the market is in a steadier state than it was earlier in the year.

“As the temporary impact of implementing the mortgage market review fades, a clearer picture of the mortgage and housing market is emerging. Nearly all indicators in the housing market align with our view of a gentle easing in market conditions.

“While the housing market has cooled in recent months, mortgage lending continues to be underpinned by positive factors.

He added: “With expectations of the first interest rate rise moving to the fourth quarter of next year, as well as positive forecasts for growth, pay and unemployment, there is potential for market activity to gain traction in the new year.”

Richard Sexton, director of e.surv chartered surveyors, explained that mortgage lending has been travelling a bumpy track, with regulatory potholes like the Mortgage Market Review and loan-to-income caps throwing the recovery off course and impacting buyer confidence. “But now things are looking much steadier and lending is beginning to recover again; at a sensible and sustainable pace.

“First-time buyers, however, may need some coaxing back to the market. The proportion of higher loan-to-value lending fell sharply in October, as many buyers were put-off by extra regulation, alongside growing wider economic uncertainty.

Mr Sexton added that a year ago Help to Buy acted as a confidence booster and kick-started the market, but the recent regulation has knocked the positivity back out of lending, despite mortgages being more accessible than ever. “Thankfully, as the prospect of a rate rise fades away far into 2015, and rates remain at record lows, this lost energy is starting to return.”

emma.hughes@ft.com