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Mortgage lending increases

TOTAL mortgage lending surged 24 per cent in March on the previous month and is three per cent higher than in the same period of 2009, the latest figures from the Council for Mortgage Lenders (CML) showed yesterday.

This puts gross mortgage lending at £11.5bn last month and the CML said that the increase in lending is in line with the typical seasonal pattern of a rise in lending volumes in March.

However, over the whole of the first quarter, gross lending was £29.5bn, a 24 per cent decline on the previous three months. This was due to applicants bringing forward applications to benefit from the stamp duty holiday, the CML said.

“This is the lowest quarterly lending total since the first three months of 2000, but is very much in line with our forecast of a gross lending total of £150bn this year”, it added.

CML economist Paul Samter said: “Overall, housing and mortgage activity remains subdued, but is comfortably higher than in the depths of the recession a year ago. Despite the increase in activity late last year and a subsequent fall early this year – due to the end of the stamp duty holiday – the underlying position looks to have barely changed.”

He added: “But with the gradually improving economic backdrop and interest rates still low, we continue to expect a gentle improvement in market conditions later in the year.”

Secured lending has fallen sharply during the financial crisis as credit channels froze.

Samter added that the longer-term problems facing the market remain and will limit the speed of recovery in the housing market and wider economy.