The level of mortgage lending in the month of May fell according to figures from the CML (Council of Mortgage Lending). The figure fell to £10.3 billion, around 2 per cent lower than the previous month.
The CML noted that the level of mortgage lending for home buyers has been rising recently whilst remortgage lending has dropped off as we have noted in previous articles.
Although recent reports from indexes and reports from the likes of the Nationwide and Halifax have suggested that the fall in the prices of property may be slowing, the CML is not expecting a rapid recovery.
“Lending volumes appear to have stabilised at extremely low levels, but the weak labour market and lenders’ limited access to funding will constrain activity for some time yet,” said CML economist Paul Samter. “Underneath the headline gross lending figure, it’s likely that a moderate improvement in house purchase lending in May has been offset by very low remortgaging volumes as borrowers stay with existing deals.”
The slight fall in the last couple of months has been attributed to lenders continuing to ration funds.
This is, according to the Bank of England, because lenders are starting to build in a larger financial cushion than they had previously in case unemployment continues to rise and more borrowers default.
Despite this, the National Association of Estate Agents continues to report more buyers than ever on their list but a shortage of houses and a spokesperson for the company believes that home ownership in this country is set to lead the UK out of the recession.