Mortgage lending in the UK slowed down sharply in May as lack of affordability and rising interest rates put a brake on the market, says the Council of Mortgage Lenders.
Latest findings by the CML suggest overall mortgage lending was £1bn lower in May than in April.
Michael Coogan, CML director general, says: “This survey and other recent date suggest that the housing market may well have begun to slow down.”
“Reduced affordability, exacerbated by the cumulative effect of rising interest rates, is acting as a natural brake. But the under-supply of property, and the continued aspirations of most people to own their homes, makes it likely that house price increases will slow down rather than stop, “ he says.
He concludes: “Recent speculation about the likelihood of a housing market crash has been alarmist and distorting. While no one is suggesting that the housing market is risk-free, our central forecast and the strongest likelihood remains that house price inflation will fall back to more sustainable levels in the medium term.”
According to the British Bankers’ Association, mortgage lending in May also saw its smallest monthly rise since November last year.
It only increased by £4.9bn, compared with the average of £5.6bn reported over the last six months, the BBA says.
Despite the slowdown, BBA director of statistics David Brooks believes “it would be premature to conclude, just on the basis of weaker lending in May, that the market is moderating”.IFAonline
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