Mortgage lending lower in May

In a statement issued earlier today, the Council of Mortgage Lenders announced that gross lending in May was an estimated £25.5 billion, which is 2% lower than the £26.1 billion estimated for April, and 19% lower than the £31.5 billion of May last year.

With figures from the Bank of England showing that the number of new mortgages being agreed is falling, this trend is set to continue in coming months. The majority of lending activity is due to borrowers remortgaging at the end of an introductory rate, rather than those taking out loans for new home purchases. Whilst their is still a huge choice of mortgage products for those with large amounts of equity in their property, or large deposits, the credit crunch and funding constraints are having a disproportionate effect on those wishing to borrow at higher loan to values, especially first time buyers. CML Director General, Michael Coogan said,

"The remortgage market remains on track to meet our forecast for growth this year, demonstrating the resilience of the market despite recent bad news. However, by comparison, the next few months will remain very weak for house purchase activity for the funding reasons which are now well rehearsed. We still await first signs of the Bank of England’s Special Liquidity Scheme indirectly helping to ease the current logjam.

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