Monthly variations in lending mask underlying trend
Published: 21 September 2011 | Author: Bernard Clarke
Gross mortgage lending in August totalled £13.4 billion, 6% higher than in July and 10% more than the £12.1 billion advanced in the same month a year ago, our latest data showed.
The August data continued a recent trend of variation in the monthly figures, reflecting seasonal activities including the completion of housing market activity that began last spring. But the August figure more or less offset weaker than expected lending completions in July.
Taken together, July and August saw a level of lending broadly unchanged from the same months in 2009 and 2010. Overall, the data is generally consistent with our view that the lending market remains flat.
What has been a little more encouraging for borrowers in recent months has been a slow easing of lending criteria, signs of a greater appetite for lending by mid-sized firms and the launch of some innovative products to try to help would-be first-time buyers surmount the affordability problems they face.
Meanwhile, if there was a crumb of comfort for borrowers in yesterday’s more pessimistic predictions for UK economic growth by the International Monetary Fund, it was that a slower recovery probably pushes even further into the future any prospect of a rise in interest rates by the Bank of England. At this stage, mortgage offers remain relatively attractive, although levels of activity remain subdued and may be vulnerable to bad economic news.