Gross lending up but slow market predicted for 2010

PAUL SAMTER, LENDING WILL, REMAIN SLOW
PAUL SAMTER, LENDING WILL, REMAIN SLOW

Gross mortgage lending was up 5% to £13.6bn in July, says the Council of Mortgage Lenders.

Lending is up from £12.9bn in June but down 3% from £14bn in July 2009.

The data suggests that lending remains on track to meet the CML’s revised forecast of £140bn, revealed earlier this month.

Its previous £150bn forecast was downgraded by £10bn and the net lending forecast reduced from £15bn to £12bn.
Paul Samter, economist at the CML, says lending will remain low in a slow mortgage market this year.

But he adds: “The majority of households continue to pay their mortgages in full every month and many have benefited from the record low interest rates.

“This looks set to continue for some time. While there are a range of risks to the outlook, low rates will help most people stay on top of their finances.”

He adds: “The rest of 2010 is likely to see lower lending and transaction numbers compared with the same period last year. Late 2009 saw a pick up as some home buyers looked to move before the end of the first Stamp Duty holiday.”

And David Whittaker, managing director of Mortgage for Business, says there are new lenders in the market and house prices remain stable.

He adds: “Lending will remain subdued as we move into 2011 as the economy faces up to the funding gap, regulation becoming tight and the recovery advancing more slowly than expected.”

David Hollingworth, head of communications at London & Country, says: “Obviously gross lending is up but you are still talking about figures that are leading the CML to reduce its estimates for total gross lending in 2010 by £10bn.

“So how you look at the 5% increase depends on whether you take a glass half full or half empty approach.”