Wed, 21 Nov 07
Gross mortgage lending grew to an estimated £32.4 billion in October, rising nearly 6% from £30.6 billion in September and £30.6 billion in October last year, according to the Council of Mortgage Lenders...
While the increase is higher than the 3% seasonal rise that might typically be expected between September and October, the figure predominantly reflects applications and approvals from before the mortgage market became affected by wholesale funding problems.
We expect mortgage advances to be somewhat lower over the rest of the fourth quarter, reflecting the Bank of England's data that shows mortgage approvals have declined during the third quarter.
CML director general Michael Coogan commented: "The next few months will be a testing time as ongoing pressures in financial markets feed through into the wider economy. Funding constraints will continue to restrict lending activity and make loans more expensive.
Buoyant economic conditions
The Bank of England's recent Quarterly Inflation Report reinforced the likelihood of a reduction in rates early next year, and that should provide some relief for borrowers sooner rather than later."
Commenting on CML mortgage lending data, David Stubbs, RICS senior economist said: Despite the on-going slowdown in the market, buoyant economic conditions are still encouraging people to take out mortgages and buy homes. Indeed, despite the withdrawal of many mortgage products from the market, those with solid earnings and the necessary deposit are still gaining access to mortgage finance.
However, lending volumes are set to trend lower in coming months. An economic slowdown is underway and the housing market is losing momentum. This is likely to prompt the Bank of England to cut interest rates in coming months.
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