Mortgage lending jumps to its highest level in six years

21st August 2014

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Despite the recent arrival of tighter regulations on home loans gross mortgage lending jumped 7% in July taking it to its highest monthly level in almost six years.

According to the latest estimates from trade body the Council of Mortgage Lenders, last month witnessed lending surge to £19.1bn, 7% up on June’s figure of £17.9bn, 15% higher than July 2013’s £16.7bn – and the highest monthly figure since August 2008, when it reached £19.3bn.

In late April the City regulator, the Financial Conduct Authority, introduced new laws dubbed the Mortgage Market Review (MMR), with the aim of clamping down on irresponsible lending. The CML believes the statistical fog of the MMR continues to hang making it difficult to unpick trends in the market but the organisation has however said it has seen “the emergence of what looks like a robust mortgage market”.

But even though July’s loan advance figures suggest a booming housing market, the CML believes budgetary constraints on the back of rising house prices could soon catch-up with potential borrowers. CML market and data analyst Caroline Offord said: “Mortgage activity seems to have remained robust following the regulatory changes but the eventual impact of these remains uncertain.”

While property transactions in the first half of the year showed a 25% increase compared to the same period a year ago, the CML said it anticipates that intensifying affordability pressures could start to dampen this upwards trend.

Offord added: “Economic conditions have strengthened but while the Bank of England has signalled an improved economic outlook since May, headwinds remain and the message about future rate rises being measured and gradual remains unchanged.”

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