Recovery in housing demand sees mortgage lending rise

MORTGAGE lending rose by two per cent in September, although the total amount lent was still 27 per cent lower than in the same month last year.<br /><br />Official figures from the Council of Mortgage Lenders (CML) show &pound;12.5bn was lent for mortgages in September, thanks to recovering levels of demand for housing. The figure compared to the &pound;12.295bn of lending seen in August. <br /><br />The CML said gross lending in the third quarter of 2009 amounted to &pound;38.9bn, an 18 per cent increase on the second quarter, but down 26 per cent on last year. <br /><br />Meanwhile, the National Institute for Economic and Social Research (NIESR) said Britain&rsquo;s economy would return to growth in the final quarter of 2009 before rising 1.3 per cent in 2010.<br /><br />But the leading think-tank estimates that the recession will have permanently reduced the UK&rsquo;s potential output by four per cent, compared to an average of three per cent of the European countries. <br /><br />Compared to the world economy, which is forecast to grow by 2.8 per cent in 2010 led by emerging Asia, the NIESR sees a feeble recovery ahead for the UK. <br /><br />Consumer spending will continue to fall through to 2011 as households save more, it said.