Mortgage lending jumps by 26% in July

Mortgage lending increased by 26% in July, compared to June figures, pointing to a modest improvement in the property market.

Mortgage lending totalled £16 billion in July, which is a 26% increase from the June figures. However lending in July 2009 is 36% down compared to July 2008.

The July rise is attributed to a slight increase in house sales, rather than people remortgaging their properties. Finding mortgages can still be challenging for many borrowers.

When previous years are taken into account, current lending levels show that the property market remains subdued. This is the lowest July lending since 2001, according to the Council of Mortgage Lenders (CML).

As Paul Samter, an economist with CML points out “Most of the indices point to house prices rising modestly over the summer months. The CML’s July gross lending estimate of £16 billion is the highest level in nine months and consistent with the rise in house purchase approvals.”

“But the bounce-back in activity from the extreme weakness around the turn of the year, coinciding with a seasonal bounce, is limited in how far it can go against the current back-drop. We expect improved sentiment to support the market, but a further significant pick-up is unlikely with so many obstacles in place.”