Gross lending estimated at £12.6 billion in August

Gross mortgage lending totalled an estimated £12.6 billion in August, according to the Council of Mortgage Lenders. This represents a decline of 13% from July's revised total of £14.5 billion, but a seasonal fall in lending activity in August is to be expected. Estimated gross lending in the month was 37% lower than last August's total of £19.9 billion.

Despite the seasonal decline in activity, underlying lending levels appear to have stabilised during the summer, with stronger lending for house purchase balanced by lower levels of remortgaging. This trend is unlikely to change for the rest of this year, with a pick-up in housing market activity checked by continuing funding constraints and a lack of ability or incentive to remortgage.

In the CML monthly market commentary published today, CML economist Paul Samter says:

"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."