Mortgage blog: Record-breaking deals responsible for continued lending recovery

Posted 3 October 2013

New figures from the UK's banks and building societies have supported the view of many experts that the housing and mortgage markets are firmly on the road to recovery. The latest Council of Mortgage Lenders (CML) data shows that lending in the UK was £16.6bn in August, 28% higher than the same period in 2012 and the second strongest month since the global financial crisis.

Experts believe that low rates brought about by the government's Funding for Lending scheme are responsible for the strong figures, as we see next.

Lending in August almost a third higher than in 2012

New data from the CML shows that around £16.6bn-worth of mortgages was advanced to borrowers in August, almost a third higher than in the same period in 2012. This represents a slight drop on the £16.7bn lent in July but is still the second strongest month since October 2008.

CML chief economist Bob Pannell says: "We are beginning to experience a healthy and broad-based recovery in mortgage lending activity. We attribute much of this turnaround to the improvement in funding markets generally, and also to the Funding for Lending Scheme. The Bank of England's approvals data suggests that the positive tone for house purchase and remortgage lending will continue."

The availability of mortgages has improved in recent months with rates falling across the board. Keith Osborne, editor of, remarks: "The average mortgage rate in the UK is now just 3.57% and cheap deals have clearly tempted many people into the mortgage market. First-time buyers are at their highest levels in five years and remortgage activity has also increased as borrowers try and secure some of the record breaking rates that lenders have offered in recent months."

Chancellor says government schemes aren't creating a house price ‘bubble'

The Chancellor, George Osborne, has recently been forced to defend some of the government's initiatives against claims that they are creating a house price ‘bubble'. The Chancellor believes that relatively low sales volumes and weak house price growth outside London mean that government intervention is needed to help the recovery of the housing and mortgage markets.

Pannell also believes that the UK is far from a ‘boom'. He adds: "One tell-tale sign of a recovering housing market is the re-emergence of concerns about a housing boom. But, as we have argued elsewhere, the housing market recovery to date appears fairly unexceptional in nature, at least compared with that of the early-mid 1990s."

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