Mortgage lending reached its highest August level last month since before the recession began in 2007, according to data from banks and building societies.
Gross mortgage lending hit £20 billion in August, an 8% decline on July but a 12% rise on August last year, reports the Council of Mortgage Lenders (CML).
Chief Economist at the CML, Bob Pannell, says the August figure is the highest since August 2007, a month before the financial crisis began.
Mortgage Lending Back to Pre-Recession Levels
By August 2008, mortgage lending had halved and only recovered to its previous levels in the past year.
Pannell observes: “Mortgage lending is currently enjoying its best spell since 2008, on the back of a pick-up in house purchase and remortgage activity over the summer months.
“We expect further modest growth for the rest of the year, although affordability pressures are likely to limit gains for first time buyers and home movers.”1
Chief Economist at IHS Global Insight, Howard Archer, recently changed his forecast for the end-of-year growth for 2015 from 6% to 7%, after the Halifax reported the highest monthly increase in house prices since May last year.
He says the CML figures support his decision: “Latest data and survey evidence clearly indicate that housing market activity is now on the up.
“We expect support for housing market activity – and house prices – to come from very low mortgage interest rates, strengthening earnings growth, high employment and elevated consumer confidence.”1
Chief Executive of mortgage broker SPF Private Clients, Mark Harris, expects mortgage lending to continue to grow for the rest of the year, driven by a continuation of record low interest rates.
“The mortgage market remains over-supplied with lenders having more money to lend than there are people looking for mortgages,” he says. “This means criteria will have to loosen and rates will have to remain low to ensure lenders hit their volume targets.”1
The CML data mainly mirrors that from the Bank of England (BoE), released earlier this month.
The BoE found that mortgage approvals increased in July, reaching the highest level since February 2014.