Interest rate rises have caused growth in mortgage lending to slow, but the Council of Mortgage Lenders still expects record levels of lending during 2007.
Gross mortgage lending reached £30.6 billion last month, according to CML, a new May record. Lending figures in May were 12% higher than April’s total of £27.4 billion, and 5% higher than the £29 billion seen in the same month last year.
However, there are signs that the rate of growth is slowing, compared with the first four months of the year, after a sustained period of rapid growth seen in 2006. Typical year-on-year growth is around 12-15% but is expected to fall to around 5% between 2006 and 2007.
Michael Coogan, director general of CML, comments: “Going forward we expect lending to ease as we progress through the year, but the market will remain in good shape.
The expectation of further interest rates hikes later in 2007 has caused a dampening in the mortgage market. However, a recent survey showed most buy-to-let investors hope to borrow more over the next twelve months, indicating home movers and first-time buyers are largely responsible for the slowdown in borrowing.
Coogan is still optimistic that gross lending figures will continue to grow and says: “Although further interest rate rises will continue to dampen demand, we are still on course to meet our prediction of a record £360 billion of lending during 2007."
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