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Mortgage lending shrunk in September ‘wiping out’ August gains

Written by: Hannah Uttley
Gross mortgage lending contracted in September to reach £20.5bn, 7% lower than the £22.1bn reported the previous month, the latest figures published by the Council of Mortgage Lenders (CML) show.

Despite a monthly fall in September, mortgage advances were 2% higher than the same time last year while registering the highest value for a September month since 2007.

The CML’s estimation for gross mortgage lending during the third quarter was £63.6bn, 11% up on Q2 and 4% higher than the third quarter of 2015.

Lending for the month of September in 2015 was £20.1bn, up on August 2015’s figure of £19.5bn.

Henry Woodcock, principal mortgage consultant at IRESS, said the dip in lending was ‘a surprise’ following the rising trend recorded since the summer.

“There was a 7% rise in gross lending in August, but the month saw a drop in approvals which has followed through into September, effectively wiping out that gain. In spite of the fact that positive movements in the market all pointed to a continued recovery from the post-referendum and summer lull, borrower sentiment has not matched market expectations. However, I think this is just a blip,” he added.

“No doubt we’ll see lower numbers as we head into the mid-winter seasonal slow-down in activity, however the signs for October still look pretty positive.”

CML senior economist Mohammad Jamei, said remortgage activity looked set to grow against a subdued purchase market.

“…housing market sentiment continued to improve in September, after recovering in August,” Jamei added.

“As a result, we expect a modest rise in approvals, though at levels lower than seen earlier this year, as the lack of properties on the market for sale and affordability constraints continue to bear down on borrowers.”

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