Mortgage lending in the UK rose 15 percent in June to approximately £13.1 billion from £11.4 billion in the previous year, according to the latest figures released by the Council of Mortgage Lenders (CML).
Gross lending also increased 7 percent compared to June 2009, but lending in the first half of this year remained unchanged at £65 billion over the same period last year.
Paul Samter, an economist at CML, said that although the estimated figures represented a seasonal increase, the £13.1 billion worth of lending is “still indicative of low levels of activity.”
"There are signs of house prices stabilising and more properties coming on to the market following the abolition of home information packs. This may improve liquidity in the market, but transaction levels are subdued and likely to remain so while access to credit remains constrained,” he said.
Many buy-to-let investors were encouraged to hold on their properties due to a 28-percent increase in capital gains tax instead of the anticipated 40-percent increase, in addition to the continuing low interest rates.
“With looming public sector cuts, taxation rises, a freeze on wage increases and inflationary pressures, we are likely to see lending tail off during the second half of 2010, with buyers likely to take a wait-and-see approach. There’s every chance that mortgage lending this year will be below the level of lending in 2009,” said Brian Murphy, head of lending at Mortgage Advice Bureau.
Six out of ten mortgages last month were intended for home purchases instead of remortgaging. Many homeowners seemed to be waiting for the bank rates to move, or at least some signs that it moved in the right direction, said Drew Wotherspoon, director of market at mortgage broker www.charcol.co.uk. “Whilst this strategy is understandable, increasing numbers of borrowers could be considerably better off if they moved their home loan now.”
He added that “the number of first-time buyers arranging a mortgage continues to be tiny, with the group accounting for just 5.4 percent of all transactions with John Charcol in June. This is the lowest it has been since December 2008 and suggests that a combination of strict lender criteria and inherent nervousness in the market continues to severely affect the amount of new entrants. This group desperately needs more competition in the 90 percent LTV market.”