Gross mortgage lending rose by 9% in August to an estimated £27.5bn up from £25.2bn in July according to the latest figures from the Council of Mortgage Lenders (CML).
This was one of the highest figures on record, says the CML, 4% higher than the figure in August 2004 of £26.5bn and the highest figure since July 2004.
There was an increase in all types of lending, although the most pronounced increase was in remortgaging which went up by 15% to £11.7bn in August from £10.2bn in July and reaching its highest level since October 2003.
This, says the CML, probably reflects borrowers taking advantage of lower interest rates and consumers remortgaging to cheaper deals, as a larger number of people were coming to the end of their previous deals. But as a proportion of total business remortgaging only rose slightly from 41% in January to 43% in August.
Lending for house purchase rose 6% to £12.5bn in August up from £11.8bn in July, but down slightly on the £12.8bn recorded last August. The CML says lending for house purchase accounted for 45% of lending down from 47% in July and 48% last August.
And the number of loans for house purchase rose from 96,000 in July to an estimated 101,000 last month but this was still below the 110,000 in August last year. First-time buyers accounted for 30% of this total.
Michael Coogan, director general of the CML says the figures prove lending has continued to strengthen over the summer.
Coogan says: “Although the market remains far from spectacular in terms of transaction numbers and house prices, the prospects of a significant market correction are receding.
"The fact that the housing market is holding up is likely to be welcome news for the MPC, as it struggles to reconcile the very different pictures emerging from different sectors of the economy. We continue to expect a moderate market for the foreseeable future."
Meanwhile, the Building Societies Association (BSA) says, among its members amounted to nearly £4.4bn compared to £4.7bn in August 2004 and approvals increased £4.4bn in August 2005 up from £3.6bn in August 2004. Net advances were £1.6bn last month down from £1.9bn last year.
Adrian Coles, director-general of the BSA, says: "Lending has clearly stabilised, with the August figures showing a slight increase over the early summer months. The prospect of a housing market crash now seems even more remote; the August base rate reduction has clearly helped to dispel any gloomy thoughts amongst home buyers."
And according to the British Banker’s Association (BBA) total net mortgage lending rose by £.43bn. While this was higher than July’s weak rise of £3.7bn it was in line with the average of £4.4bn over the previous six months says the BBA.
David Dooks, director of statistics at the BBA, says: “After fluctuations in June and July, August saw mortgage lending return to the very stable trend that we have seen throughout this year. There was a stronger increase in overall consumer credit in August as a result of higher demand for loans and overdrafts, but in marked contrast, credit card lending fell for the second time this year. This weakness on cards ties in with the very weak retail sales data and reflects consumer caution in relation to their borrowing.”
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