Mortgage lending's 5% October rise in line with seasonal average

20 November 2009 / by Rachael Stiles

Gross mortgage lending rose five per cent in October, the latest statistics from the Council of Mortgage Lenders show, which is in line with the average for that month over the last decade.

The CML said that this is a typical season increase in mortgage lending – the same proportionate average increase as the last 10 Octobers – which is a promising sign of stability in the mortgage market.

But while mortgage lending rose five per cent between September and October, it remained 27 per cent lower than October 2008's figures, down to £12.9billion from £18.5billion.

But the coming months should see an improvement in the annual comparison of lending totals, the CML predicts, as lending volumes dropped off towards the end of 2008 into 2009.

Furthermore, October's figures are in line with the CML's gross lending forecast for 2009 of £141billion, with a seasonal slowdown expected as Christmas approaches.

Commenting on the latest figures, CML economist Paul Samter said: "There has been a significant change in the type of lending taking place from the start of the year. House purchase activity has picked up significantly."

Meanwhile, he said that remortgaging has dropped to decade-low levels, because there is little incentive for existing borrowers to refinance amid current market conditions, while others find themselves unable to do so due to equity constraints.

"The coming months are likely to be dominated by seasonal factors rather than underlying change," he added.

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