The figures are almost identical to July's gross lending total of £16.7 billion but lending is 28% higher than August last year when it was £13 billion.
CML chief economist Bob Pannell said it is the beginning of a healthy and broad based recovery in mortgage lending activity. ‘We attribute much of this turnaround to the improvement in funding markets generally, and also to the Funding for Lending Scheme. The Bank of England's approvals data suggests that the positive tone for house purchase and remortgage lending will continue,’ he explained.
‘One tell tale sign of a recovering housing market is the re-emergence of concerns about a housing boom. But, as we have argued elsewhere, the housing market recovery to date appears fairly unexceptional in nature, at least compared with that of the early to mid 1990s,’ he added.
Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), agreed that the recovery is underway. ‘With August’s gross lending figure streets ahead of last year’s figure by over £3.5 billion, conditions are ripe for growth to continue with more funding, favourable interest rates and a swell of public demand. The mortgage market is clearly fulfilling its side of the bargain in supporting the recovering economy,’ he said.
‘With over 12,500 reservations for the Help to Buy equity loan scheme, there is extra incentive for house builders to do likewise and increase the supply of new homes firm in the knowledge this will be backed by mortgage availability,’ he pointed out.
‘IMLA’s latest market research found both lenders and brokers have higher expectations for market performance in 2013 following a busy first half of the year. Many lenders will be engaged to a race to the finish to meet their target volumes. But with the Mortgage Market Review implementation looming, they will be careful not to overstretch the mark as long term affordability remains just as important as short term access to mortgage loans,’ he added.
But Brian Murphy, head of lending at the Mortgage Advice Bureau, said it is a good sign that growth is steady. ‘While gross lending for August 2013 has demonstrated a marked increase since August 2012, rising by 28%, the fact that the overall lending figure has remained almost identical to July’s demonstrates recovery is being achieved at a steady yet sustainable rate, quashing recent speculation that the situation is snowballing out of control,’ he said.
‘The mortgage market continued to hold steady in August despite it being the peak month for summer holidays. In a fast moving market where conditions are improving every month, consumers have grown in confidence following the Bank of England’s forward guidance on interest rates. Noticeably more applicants opted for variable rates in August, and a wider choice of products on offer and improved...
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