Mortgage lending shoots up to seven-year high

Lenders have revised their estimates for the housing market this year, believing there will be more housing transactions but fewer purchases made with mortgages than they had first thought.

The Council of Mortgage Lenders – which yesterday reported June mortgage lending at a seven-year high – said it now expects 1.2m housing transactions, up from the 1.18m it forecast last December.

However, it now expects gross lending to be £209bn this year, not the £222bn it originally predicted.

If the CML is correct, it would mean transactions will be virtually unchanged since last year.

While far better than the sub-million transaction levels in the years from 2008 to 2012, transactions are still running well below pre-crunch activity. In 2006, there were nearly 1.7m sales.

The CML is also forecasting 16,000 repossessions this year, sharply down from the 22,000 it was predicting last December.

For June, the CML says that gross lending rose 29% compared with May and 15% compared with June of last year.

It is the highest figure since July 2008.

Forward indicators of lending suggest an upturn will be felt in coming months, said the CML.

CML economist Mohammad Jamei said: “Activity is picking up after a slow start to the year. Our lending figure for June may be flattered by the end of political uncertainties related to May’s general election, and the underlying picture is likely to be one of only modest recovery.

“This should be supported by favourable conditions in the economy, though it will be limited by rising house prices and affordability pressures.”


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