Mortgage lending jumps 24% in May

Gross mortgage lending in May was up by 24% on the previous month reaching an estimated £12.2 billion, according to the Council of Mortgage Lenders.

April’s gross mortgage lending figure was £9.9 billion but the figures have been distorted due to the end of the stamp duty holiday in March. Gross lending in March stood at £12.6 billion, up from £10.3 billion in February and £10.7 billion in January.

The CML says that mortgage lending and housing transactions have see-sawed in recent months, but the underlying position appears to be broadly flat.

On an annual basis May’s gross mortgage lending figure was 13% higher (£10.8 billion).

CML chief economist Bob Pannell comments: “The government has recently announced a number of measures to counter the adverse effects from the Eurozone crisis. It clearly senses an opportunity to bolster home ownership and housing activity, and we look forward to hearing more details about the “funding for lending” initiative which seeks to deliver this.

“Meanwhile, mortgage lending continues to seesaw, albeit against a broadly flat market. Unfortunately, a number of one-off factors, such as the Diamond Jubilee and the Olympics, are set to distort market indicators over the coming months, and it may be the autumn before we can more accurately gauge the state of the market.”

Paul Hunt, managing director of Phoebus Software said: “Many will hail the massive rise in lending on the month as a sign of returning positivity among mortgage lenders and it’s certainly a relief that stamp duty doesn’t appear to have put an ongoing brake on the market – but it’s the annual growth in lending that’s really significant.

“In spite of the absence of economic growth and amid growing fiscal hurdles in the property market, the lending industry has found a way to sustainably and significantly boost activity in the property market.”