Mortgage lending leaps to five-year high
Last month’s figure was 17% higher than the £12.6bn lent in May 2012 and is the highest monthly estimate for gross mortgage lending since October 2008.
CML chief economist Bob Pannell said the result could reflect a flood of sales following the spring cold spell: “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 appetites.
“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.”
Edinburgh Mortgage Advice director Mark Dyason said May was a “humdinger” for the mortgage market but warned the demand on banks to raise more capital could affect lending volumes: “The banks can’t have their capital cake and lend it. Something has to give and it may well be the higher loan-to-value borrower that loses out.
“Despite the rise in lending volumes, some bigger lenders are still not making enough of the Funding for Lending Scheme and the increased focus banks are under from the PRA means this could continue for some time yet.”
SPF Private Clients chief executive Mark Harris said the pick-up in business reported by mortgage brokers was finally filtering through to the official figures: “’It is not just rates that are falling – lenders are crucially also loosening criteria.
“Practically every move made by lenders in the past few months has been positive, either in terms of pricing, criteria or both. This will also help boost remortgaging numbers in coming months, which are already showing signs of improvement.’