Mortgage lending up 26%

Thursday, 20 August 2009 12:00

Mortgage lending rose 26 per cent in July from last month but lenders warn another dip is likely towards the end of the year.

Total lending jumped to £16 billion in July from £12.7 billion in June, reflecting an improvement in the house sales over the last few months, the Council of Mortgage Lenders (CML) said.

But house purchases typically rise in the summer, and the figure is still £11 billion lower than the average in July - the lowest since 2001.

"The housing market has continued to improve gradually in recent weeks, as activity picks up further from the lows seen around the turn of the year.

"But, as the Bank of England has pointed out, the economic backdrop remains challenging and the housing market recovery is fragile.

"We may see a modest dip towards the end of the year as seasonal factors weaken," said CML economist Paul Samter.

Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA), said: "To point to these positive indicators is not to say that the market has recovered - far from it - but the increase between June and July suggests confidence is returning."

The CML said the housing market recovery is likely to be fragile and will continue to be subdued while unemployment is high and banks need to restructure their balance sheets.

The general story over the rest of the year is to be one of a "slow but more stable market", the group added.

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