Mortgage lending falls by 4% in August

Mortgage lending conditions remained tight in August, despite the launch of the government’s Funding for Lending scheme, designed to offer low-cost finance to banks on the provision that they pass these savings on to customers.

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Data from the Council of Mortgage Lenders (CML) shows that gross mortgage lending plummeted by 4% in August, in a year on year comparison, to reach an estimated £12.6 billion.

This is down from the £13.1 billion recorded in August 2011. The figure is also down by 1% compared to July.

Recently released Bank of England lending figures showed that the number of mortgage approvals saw a marginal increase in July, rising from 44,124 to 47,312.

The CML said that the funding for lending scheme will stimulate buyer interest in the coming months, although it outlined that it would have to wait until the end to examine the full impact of the scheme.

Buyer numbers are also set to be boosted by the NewBuy scheme, which has been up and running for around six months

The scheme offers first-time buyers and current homeowners the chance to purchase a new-build property, with deposits starting as low as 5%.

“We expect to see stronger take-up of NewBuy over the coming months, helped by a concerted marketing effort by builders and the recently-launched funding for lending scheme, which has prompted reductions in NewBuy mortgage rates,” said CML chief economist Bob Pannell.

“The funding for lending scheme is a bold move that has the potential to greatly influence the course of the housing market over the next year or so. While not a panacea for all housing market problems, the scheme does offer the potential to improve the lending environment.”

Posted by: WarrenWilson Categories: Finance Tags: , Comments Off on Mortgage lending falls by 4% in August

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