CML responds to Bank lending survey: green shoots, no roots!

The CML today welcomed publication of the new Trends in Lending report by the Bank of England, which highlights the need for measures in tomorrow's Budget to enhance lending activity by encouraging all types of firms to commit more funds to the mortgage market.

The report confirms the CML's view that there has been a modest pick-up in housing market activity recently, but that it remains at an extremely low level.  Despite this small improvement, the CML does not foresee a lasting, significant increase in lending volumes until funding conditions improve.

The report provides additional and timely data, drawn from the Bank's own monetary and financial statistics and from those provided by six major UK lenders contributing to the Lending Panel set up by the chancellor at the time of his pre-Budget report.  But in his Budget tomorrow, the chancellor needs to build on the work of the Lending Panel with measures to enable all types of lenders - banks, building societies and specialist lenders, and large and small firms - to provide more mortgage funding.

As well as measures to encourage an expansion of lending by all types of firms, the CML is calling on the chancellor to use tomorrow's Budget to:

• extend and simplify low-cost home-ownership to provide more help for first-time buyers, the building industry and the wider economy;
• raise the stamp duty threshold to £250,000 - and remove higher rates of duty - pending a fundamental review of this tax; and
• expand the availability of income support for mortgage interest and mortgage rescue to support the wide range of ways in which lender are already extending forbearance to borrowers in difficulty.

Commenting on publication of the Trends in Lending report, the CML's director general Michael Coogan said:

"The report says some increase is expected in mortgage availability, but the volume of lending - and demand from consumers - will remain weak in the coming months.  It chimes with our own briefing for members earlier this month, which we headlined Green shoots, no roots!  Any recovery in market activity is at a delicate stage, but would be enhanced by measures in the Budget to enable more lenders to provide more lending."