£1bn rise in mortgage lending

Posted: 12 Oct 2007 11:43:50 GMT

Total gross mortgage lending was £1 billion higher in August than it was 12 months ago.

Total gross mortgage lending was £1 billion higher in August than it was 12 months ago.

Figures from the Council of Mortgage Lenders (CML) also revealed that there was a five per cent increase in loans for house purchase month-on-month.

It means that 99,000 loans were taken out for this purpose in that time, with a total value of £15.7 billion.

The CML says that a booming buy-to-let sector buoyed the market and revealed that fixed-rate deals are still the most common form of mortgage.

This is largely down to high interest rates and uncertainty in the financial markets over the global credit crunch, but the organisation points out that we may be entering a period of favourable conditions for some borrowers.

"There may be some relief for borrowers with expectations of an interest rate cut, perhaps as early as November," said CML director general Michael Coogan.

"We are set to have a very segmented market for some months to come. The sub-prime sector is still facing funding constraints, while mainstream fixed-rate deals have begun to get cheaper," he added.

The Bank of England has maintained the base rate of interest at 5.75 per cent for three consecutive months and many analysts support the CML view that the rate will come down before the end of 2007.

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