Mortgage lending in the UK dipped by £1.2bn in October compared with the previous year, according to data from the Council of Mortgage Lenders (CML).
But despite the five per cent year-on-year decline, the figures were slightly above the trend for the last six months, in which mortgage lending averaged £20.1bn.
They held on to post a small monthly rise of £100m - gross mortgage lending was £20.6bn for the month.
“Housing market sentiment is holding up well, with demand still strong. This has led to a pick up in approvals, as expected,” said Mohammad Jamei, CML’s senior economist.
This relatively healthy demand is not being matched by housing supply. Ahead of next week’s Autumn Statement, housing minister Gavin Barwell admitted that the housing shortage was affecting the market for buyers.
“We know there is more to do to ensure the housing market works for everyone and not just the privileged few and we will be setting our further details in our housing white paper shortly,” he said on Monday.
“The lack of private sellers continues to be an obstacle for would-be borrowers,” said CML’s Jamei.
“For this reason, we expect lending in the months ahead to be driven more by remortgaging activity and less by house purchases. Remortgaging will be helped by competitively priced mortgage deals, which are encouraging borrowers to refinance,” he said.
Mortgage lending has been slowly recovering since the financial crisis, which was triggered by over-risky lending in the US housing market. Annual pre-crisis lending reached £356.8bn in 2007, before falling to £247.8bn in 2008. Total lending last year reached £219.6bn.