Lending rises, but industry is cautious

The trade body revealed that gross lending in July stood at £16bn, 26% higher than in June, though still more than a third lower than in July last year.

The figures represent an historic low as the gross lending in July was the lowest July figure since 2001. It was also £11bn lower than the July average over the previous seven years.

Despite an increase in mortgage lending, house sales and property prices in recent months, the trade body warned the housing market would slow down again later this year.
Paul Samter, economist at the CML, said it expected improved sentiment to support the market, but a further significant pick-up was unlikely with so many obstacles in place.

Nick Hopkinson, director of Property Portfolio Rescue, said July’s increase was “no cause for celebration”.

He explained: “This simply reflects the natural seasonality of the housing market, with more sales this time of year. Lending is still 50% down on pre-credit crunch volumes for the peak summer months; these lending and sales levels are a strong indicator of further price falls later in the year.”

Peter Bolton King, chief executive of the National Association of Estate Agents, said the figures demonstrated the extent of the slump in the housing market over the last 12 months, but was hopeful that confidence was returning.