Mortgage lending sprang up 24% in March

Mortgage lending sprang up 24% in March

19 April 2010 / by Rachael Stiles

Gross mortgage lending rose 24 per cent in March compared to the previous month, which is in line with seasonal trends, suggesting that mortgage lending is getting back on track.

According to the figures for March from the Council of Mortgage Lenders, gross mortgage lending was an estimated £11.5billion in March, which the CML says is typical for March lending in line with seasonal patterns.

The results also show that lending increased three per cent year-on-year, compared to March, 2009.

But despite the monthly increase, lending for the first quarter of 2010 was an estimated 29.5billion – a 24 per cent fall compared to the final quarter of 2009, and a nine per cent fall on the same period the previous year.

Quarterly lending has not been so low since the first quarter of 2000, but, the CML says that the figures are in line with its forecast of total gross lending of £150billion for 2010.

Commenting on the figures, CML economist Paul Samter said that while housing and mortgage activity remains "subdued" it is "comfortably higher" than the same time last year, when the economy was in recession.

A sharp increase at the end of 2009 before the stamp duty holiday came to an end, and the subsequent fall at the start of 2010 saw the underlying position of the mortgage market remain largely the same, he explained.

Mr Samter said that with interest rates remaining low and the country no longer in recession, the CML expects to see "a gentle improvement in market conditions" later this year.

"However, the longer-term problems facing the market remain and will limit the speed of recovery in the housing market and wider economy," he added.

"Financial institutions still face the prospect of around £300 billion of official support schemes beginning to end from next year, and will need to find alternative funding sources. This will likely limit how much new funding can be made available to the housing market."

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