ING to housebuyers increased strongly in August, offsetting July’s poor figures according to statistics released yesterday by the Council of Mortgage Lenders (CML).
Lenders doled out £13.4bn last month, up six per cent on July and an increase of 10 per cent on August 2010.
July 2009 was the last time monthly lending was higher, when it hit £14bn.
However, analysts do not believe this is the start of a new boom, or even that lending is growing substantially.
“The underlying picture is one of subdued but broadly stable activity,” said the CML’s chief economist Bob Pannell. “Taking July and August together, lending has shown little change on the same months of 2009 and 2010 as July’s figures were weaker than expected.”
Lending traditionally increases in the summer months, yet this year monthly lending fell by almost five per cent from June to July. The CML blames the Eurozone debt crisis. “[T]here have been signs of funding markets being disrupted by escalating sovereign debt problems,” explained Pannell, who believes property prices are being held up by low building volumes rather than strong demand.
Interest rates, too, may have played a part in boosting the figures, rather than an increase in demand or increase in new purchases.
“It seems very possible that the gross mortgage figure was lifted in August by home owners remortgaging to take advantage of a modest dip in some mortgage interest rates resulting from heightened expectations that the Bank of England will not hike interest rates before 2013,” explained IHS Global Insight’s Howard Archer.