The Council of Mortgage Lenders (CML) has released new data that shows mortgage lending fell in June.
Gross mortgage lending fell to £11.9 billion, down 4.6 per cent from May’s total of £12.5 billion and down 5.2 per cent from June 2011’s equivalent figure.
Gross lending for the second quarter of 2012 reached a total of £34.2 billion, up two per cent on the first three months of 2012 when it was estimated to be £33.6 billion and up three per cent from the total of £33.3 billion over the same period in 2011.
Total lending in 2012 has so far reached £67.9 billion, up seven per cent on the first six months of 2011.
CML chief economist Bob Pannell said: "Mortgage lending has experienced something of a see-saw pattern over recent months, largely reflecting the short-term spike and subsequent trough in house purchase activity associated with the ending of the stamp duty concession for first-time buyers in late March.
"The recent launch of the funding for lending scheme (FLS) comes at a time when credibility in further quantitative easing had started to wane. FLS will help guard against a contraction in lending over the next 18 months."
However, Jonathan Samuels, CEO of Dragonfly Property Finance said: “To say the market is see-sawing is an understatement. There is no direction at all in the mainstream mortgage market, it's simply mirroring the agonies of the economy.
"Given the failure of previous schemes to get the high street banks lending, there's no reason to believe that the Funding for Lending initiative will fare any better.”
Howard Archer, Chief UK & European Economist at IHS Global Insight believes the data reinforces his view that house prices will dip during the rest of the year.
“The drop in gross mortgage lending in June reported by the CML reinforces our suspicion that house prices are likely to trend modestly lower over the coming months.
Specifically, we expect house prices to fall by around 3% over the rest of this year.
“Furthermore, there remains a significant danger that house prices could fall even more than this due to the serious downside risks to the UK economic outlook, particularly stemming from the problems in the Euro zone.”
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