Slow down in mortgage lending

According to recent reports released from the Council of Mortgage Lenders, mortgage borrowing appears to have slowed down over the past month compared to the previous month, indicating that the housing market may be showing signs of cooling.

April saw mortgage lending slow down compared to March of this year, but nevertheless also reflected the highest April lending on record.

According to the Council of Mortgage Lenders £28.8 billion was borrowed in mortgages during the month of April this year. This reflected a drop of nine percent on the amount that was borrowed in March of this year, which was £31.7 billion.

However, although April's figure was reflected a reduction compared to March it also reflected an eighteen percent rise compared to April of last year, as well as reflecting the highest figure on record for April.

According to some analysts the housing market does appear to be cooling, despite healthy lending and borrowing figures.

Howard Archer from Global Insight stated: 'Although the CML reported the strongest April mortgage lending figures on record, this includes re-mortgaging activity and was clearly boosted by people looking to take out new fixed deals in the light of further anticipated interest rates hikes.'

He added: 'Housing market activity seems likely to moderate further over the coming months as May's interest rate hike adds to affordability pressures. Furthermore, there is a very real risk that there will be another rise in interest rates before long, which will be a major worry to potential house buyers.'

Although the amount that was borrowed in April this year was higher than in April 2006, the Building Societies Association has reported that both approvals and net advances were lower this April compared to last April.

Tom Smith
1st June 2007

 

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