Mortgage lending jumps ahead of Funding for Lending Scheme

Tim Wallace
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MORTGAGE lending jumped sharply in July, according to industry data published yesterday, with the government’s new Funding for Lending Scheme expected to boost loans further through August.

Gross lending rose eight per cent to £12.7bn in the month, reversing the fall to £11.7bn in June, the Council of Mortgage Lenders revealed.

However, analysts warn the market overall remains relatively flat, with large monthly variations. On the year, lending is only up 1.68 per cent from £12.49bn in July 2011.

The real estate sector has struggled in part because buyers require increasingly large deposits to qualify for a mortgage, hitting first-time buyers particularly hard.

But analysts also believe uncertainty caused by the Eurozone crisis and double-dip recession have dampened the market.

“It might be too early to call the end of the mortgage famine but there are certainly encouraging signs,” said SPF Private Clients’ Mark Harris.

“The Funding for Lending Scheme should deliver more competitive mortgage rates in coming weeks and these are already filtering through – we’ve seen five-year fixed rates fall to historic lows and expect more jostling for position in this marketplace.”