Latest mortgage lending estimates point to best August since 2008

18th September 2014

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Gross mortgage lending jumped 13% on an annual basis last month marking the best total for August since 2008 according to estimates from the Council of Mortgage Lenders (CML).

The organisation forecast that lending hit £18.6bn last month. While this marks a 5% drop on July’s £19.7bn, the strongest monthly out-turn in six years, it represents a marked rise on August 2013’s tally of £16.4bn and the best for the month since 2008, when lending hit £19.3bn.

CML chief economist Bob Pannell said: “The narrative of recovering house purchase and buy-to-let activity continued through August. However, it is important to be aware that this picture is being flattered by strong seasonal factors through the summer period.

“A gentle slowing of lending activity may now be in prospect, as a result of the continuing impact of tighter lending rules and a softening of the London market.”

Howard Archer, chief UK & European economist at IHS Global Insight noted that while the CML data indicates that the housing market is currently seeing decent growth, he asserted that the bulk of the evidence indicates that activity has lost some momentum compared with the earlier months of this year.

He added: “The CML itself suspects that ‘a gentle slowing’ in housing market activity may now be in prospect. This ties in with our view. On balance, we expect house prices to generally rise at a more retrained restrained rate over the coming months.”

Archer anticipates that given the combination of higher house-prices, the prospect of rising interest rates and tougher credit checks, buyer interest may take a step back. He added: “Even so, with the economy seen holding up pretty well going forward, employment high and rising, consumer confidence elevated and earnings growth likely to improve and with housing supply still tight in a number of areas, house price growth seems unlikely to fall away.”

For his part Archer expects house prices to increase by around 1.5% to 2% over the final four months of 2014 and by some 6% in 2015.

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