Just when experts thought the mortgage market was beyond saving, the Council of Mortgage Lenders (CML) has announced a rise in mortgage lending between June and July this year.
The news comes amid several high street lenders dropping their mortgage rates
and making home loans more achievable. According to the CML, mortgage
lending increased by five per cent in July, an estimated total of £24.8billion.
Nevertheless, according to experts, the market still has a long way to swim to reach safe waters. It was predicted earlier this week that mortgage lending will fall further, by as much as 20 per cent, before it recovers. Despite this, the news from the CML offers a ray of sunshine in an otherwise grey outlook.
However, Bob Pannell, head of research at the CML
, seems unable to forget the fact that mortgage lending remains considerably lower year on year, a difference of 27 per cent. He comments: "While there was a small month-on-month increase in activity, it represented a notable decline from a year ago.
"This continues the weaker picture seen in June and points towards the more subdued levels of lending we are likely to see in the second half of 2008."
Commenting on the ups and downs of the mortgage market, senior economist at the Royal Institution of Chartered Surveyors (RICS), Oliver Gilmartin said, "The recent improvement in the monthly gross lending could offer some encouragement in what are typically slower months."
However, he agreed that it is too early for hopes to be rising, adding: "Lending still remains 27 per cent down on a year ago levels and access to mortgages remains challenging. While banks are still in the process of repairing their balance sheets and as the securitisation markets remain effectively closed, mortgage lending is unlikely to recover in any meaningful way."
In response to the mortgage drought, the National Consumer Council (NCC) has called for local councils to be given the means and authority to offer mortgage help to those who need it most. The news was revealed in a letter published today in The Times, which argued banks should not be monopolising the mortgage market.
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