Highest monthly mortgage lending since October 2008

The Council of Mortgage Lenders estimates that total gross mortgage lending in May increased to £14.7. This is a rise of 21% from £12.2 billion in April and 17% higher than the total of £12.6 billion in May 2012. 

This is the highest monthly estimate for gross mortgage lending since October 2008.

Commenting on market conditions in this month's Market Commentary, CML chief economist Bob Pannell observes:

“The imminent change of guard at the Bank of England takes place against the backdrop of a modestly improving UK economy, albeit one that appears to rest upon a pick-up in consumer spending and a recovering housing market.

“Funding conditions, helped by the funding for lending scheme, continue to look favourable and are supporting more competitive mortgage pricing and availability and a gradual resumption of lenders’ risk appetite.

“While the direction of travel is clear and fits well with the more positive housing surveys from RICS and others, our forward estimate does imply somewhat stronger house purchase activity than we had been expecting. This may reflect a degree of pent up sales following the extended spell of poor weather earlier this year”.

Richard Sexton, director of e.surv chartered surveyors, said: “There’s finally some real energy and ambition in the mortgage market. Despite rising house prices, more buyers are accessing mortgages. Greater lending reflects returning confidence in the market. Even better news is that the increase in lending was powered by an increase in high LTV borrowers. First-time buyers in particular, have had a hard run of late. The sum they must save as a deposit to get onto the housing market is often crippling. Building the deposit is made all the more arduous by stubborn inflation, weak wage growth and low savings rates. But high LTV lending is 26% higher than last year. Lenders have been providing more support to high LTV borrowers, by offering a wider range of mortgages, and dropping rates.  Schemes such as Help to Buy offer further options. Now is the time for ambitious high LTV borrowers to get on the housing ladder.”