Mortgage Market Subdued Despite Third Consecutive Home Loan Increase

Fri, 20 Aug 2010

The Council of Mortgage Lenders has revealed an increase in mortgage lending for the third consecutive month. Banks and lenders approved a total of £13.6 billion in home loans during July – a five per cent increase on June and the highest level since the same month of 2009. Despite signs of improvement, analysts are warning that the home loan market is set to remain subdued for the remainder of 2010, and have pointed out that although July saw the highest level of mortgage lending in a year, the figure remains 4 per cent less than the amount borrowed in July 2009.

The new figures follow the decision by the Council of Mortgage Lenders to downgrade their forecasts for total mortgage lending in 2010 from £150 billion to £140 billion, putting it below the level of borrowing in 2009. The group also reduced the forecast for net lending from £15 billion to £12 billion – an estimate which takes into account debt repayments.

While some analysts point to an increase in the number of mortgages being offered by banks and building societies, such optimism contradicts the warning of the Bank of England this week that the availability of secured credit remains tight.
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