Gross mortgage lending includes lending for both house purchase and remortgage. Despite a modest pick-up in overall lending activity during May, lending for house purchase is running below year earlier levels – as April Bank of England approvals data indicate.
Looking ahead, interest in remortgaging is now also likely to be less pronounced, as expectations of higher interest rates this year recede. The MPC once again kept rates unchanged at its June meeting – for the 27th successive month.
CML director general Michael Coogan said: "Gross mortgage lending in May recovered after low activity levels in April. Distorting effects from Easter and bank holidays cloud the current picture, but the likelihood seems to be for essentially flat levels of lending over the next couple of months."
Paul Hunt, managing director of Phoebus Software said: “May’s rise in gross lending has been primarily driven by increasing remortgage activity, as high inflation put a rate rise back on the agenda. That rise now looks rather more distant and it’s probable the heat will go out of the market for remortgages until borrowers again start to worry about their repayments getting more expensive. Nevertheless, it would be foolish for borrowers to ignore the current price of fixed rate deals. Lenders are pricing mortgages more and more competitively, which is an indicator of increasing confidence. Taking advantage of this burgeoning price war could be the smartest move for borrowers looking to maintain the benefits of low rates for years to come.”
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