Mortgage lending continues to boom

Mortgage lending is still rising strongly, says the Council of Mortgage Lenders (CML).

Total lending in March amounted to £31.3bn – 10% higher than a year ago and another monthly record.

The British Bankers Association (BBA) says net mortgage lending, which strips out the effect of repayments, rose by £5.1bn in March.

The continued strong lending has come despite three rises in interest rates since last summer.

With house prices still rising briskly, and now standing about 10% higher than a year ago, it is little surprise that mortgage lending has kept pace.

Other recent industry data on mortgage approvals and enquiries from new buyers has all pointed in the direction of the market staying buoyant in the coming months.

Despite widespread expectations of further rises in the cost of borrowing this year, the CML predicts that lending will stay at record levels.

“There is still a question mark over just how strong mortgage lending will be over the coming months as the prospect of higher interest rates takes its toll on demand,” said the CML’s director general Michael Coogan.

“But we continue to expect mortgage lending to reach a record £360bn this year,” he added.

The BBA took a more cautious view of the likely short-term trends in mortgage lending.

“In the last two months, demand has moderated a little and, with no short-term prospect of costs reducing, mortgage lending growth should ease further in the months ahead,” said David Dooks, the BBA’s director of statistics.

Meanwhile, the amount of money being lent on credit cards continued to fall, with net borrowing on cards issued by the major banks dropping by another £117m last month.

Source: bbc.co.uk