Mortgage blog: Lending hits highest level since banking crisis

Posted 28 August 2013

Cheap mortgage rates and a wider choice of deals have pushed mortgage lending in the UK to its highest level since before the global financial crisis. New figures from the Council of Mortgage Lenders show that total gross mortgage lending in July increased to £16.6bn, up 12% on the previous month. This surge in applications means that mortgage lending in the UK is on course for its best year since 2008.

Wider choice of deals and lower rates result in mortgage lending surge

The CML figures show that £16.6bn was lent in July, a rise of 29% on the same month last year. This is also the highest monthly estimate for gross lending since October 2008, when it was £18.6bn.

Richard Sexton, director of E.surv chartered surveyors, says: "Rates are at record lows, and there is a wider range of deals for borrowers to choose from than at any point since 2008. The slew of mortgages has sent sales soaring and house prices to record highs. The mortgage market has received much more help and attention from the government than other areas of the economy.

"Banks have used Funding for Lending to focus on improving household lending, which they see as safer than lending to SMEs, and Help to Buy offers another incentive for banks to increase high-LTV lending even further."

The most recent data shows that gross mortgage lending for the first six months of the year has reached just over £75bn. FT Advisor reports that the third quarter is usually the one where there is the most lending, so total gross mortgage lending for the year could reach £160bn, more than 10% higher than the £142.5bn in lending seen in 2012.

Caroline Purdey, CML market and data analyst, remarks: "An improvement in sentiment and activity continues to show in the UK housing and mortgage markets, with a more positive picture also starting to emerge in the economy. Our forward estimate of gross mortgage lending in July reinforces a growing evidence base of a strengthening in the housing and mortgage markets."

The Financial Times reports that "though lending remains well below its pre-crisis peak, the strong figure adds to evidence that the UK's mortgage market is recovering". Keith Osborne from WhatHouse.co.uk echoes these sentiments. He adds: "With lending hitting a five-year high and a choice of over 10,000 mortgage products now available to borrowers, it's clear the mortgage and housing markets are starting to recover.

"This surge in lending is certainly good news for UK housebuilders, many of whom have posted improved first half results in 2013. And, of course, it's great news for borrowers who now have access to a wider choice of cheaper mortgage deals than at any time since 2008."

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