CML reports growth in mortgage lending in May

Monday, 20 June 2011 03:20

May saw a return to positive growth for the mortgage lending market, with a rise in gross approvals on a monthly and annual basis.

Over the previous year, a relatively modest increase of one per cent in gross mortgage lending was recorded by the Council of Mortgage Lenders (CML).

But compared with April the rise was much more marked at 12 per cent over the previous month - an increase of almost an eighth.

Michael Coogan, director general of the CML, says: "Distorting effects from Easter and bank holidays cloud the current picture, but the likelihood seems to be for essentially flat levels of lending over the next couple of months."

However, the positive picture may be being biased somewhat by remortgaging activity, which is incorporated into the data.

If lending for new property purchases alone is considered, the CML says levels in 2011 are running below their 2010 total to date.

Earlier in June, the CML noted the link between remortgaging activity and the expectation that the Bank of England's rate-setting body, the Monetary Policy Committee, will raise the base rate.

With no change made for over two years, however, the organisation added that an imminent rise seems unlikely and remortgaging activity may therefore slow in the months to come.

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