Mortgage lending fell by 13% in August

Mortgage lending fell by 13% in August compared to July, and was 37% lower than in August 2008.

£12.6 billion of gross mortgage lending in August was 13% lower than in July, according to the Council for Mortgage Lenders (CML).

A seasonal reduction in mortgage lending is expected in August with school holidays and vacations impacting on house purchase transactions.

Despite the decline in August, the CML suggests that the underlying lending levels have stabilised during the summer and are unlikely to change throughout the rest of the year.

On balance, there is a stronger tendency for people to take on a new mortgage rather than arrange a remortgage as loan availability is still constrained by risk adverse lenders.

Demand for mortgages is generally weak compared to recent years, however.

Paul Samter, CML economist advises that “The likelihood of a significant pick-up in lending remains weak, but the prospects for wholesale funding markets are improving. This could result in a gradual easing in constraints on the supply of funding over time.”

“However, demand from consumers and a prudent approach to lending criteria are likely to mean that the market remains subdued.”