The Council of Mortgage Lenders has warned that the 10% year-on-year rise in gross mortgage lending in August does not represent a sustained recovery in lending volumes.
Data from the CML published last week shows gross lending totalled £13.4bn in August, up by 6% on the £12.6bn lent in July and 10% higher than the £12.1bn that was advanced in August 2010.
But the trade body says August’s strong performance follows weak lending in July and when the two months are taken together, lending is little changed on the same months of 2009 and 2010.
Bob Pannell, chief economist at the CML, says: “Much of the recent variation in monthly lending figures appears to have reflected seasonal factors, with the underlying picture being one of subdued but broadly stable activity levels.
“August more or less offset the weaker than expected July figure.”
David Brown, commercial director at LSL Property Services, agrees that August’s pick-up must be considered in the context of a more subdued market in July.
He says: “It’s difficult to see a double-digit percentage improvement in the mortgage market being sustained over the medium term.
“Nonetheless, the mini-bounceback in August does demonstrate that lenders have the appetite to lend.”
The CML also acknowledges that growing economic turmoil in world markets could affect mortgage lending in the coming months.