Mortgage lending up 5% in October

The CML said that gross mortgage lending was estimated to have been £13.5 billion in October, up from £12.9 billion in September, but significantly lower than the £18.5 billion reported in October 2008.

According to the CML the rise between September and October was “typical seasonal activity”, with a five per cent monthly increase being the average over the last ten years.

The CML said that the annual comparison of mortgage lending levels should start to improve in the coming months as underlying lending volumes fell sharply at the end of 2008 and in early 2009.

Gross lending for the whole year is still expected to be around £141 billion following the October data. In the last weeks of the year the CML said it expected to see some seasonal slowdown.

Paul Samter, CML economist, said, “There has been a significant change in the type of lending taking place from the start of the year. House purchase activity has picked up significantly. In contrast, remortgaging has dropped to decade-low levels as many borrowers have little incentive to refinance when they move onto low reversion rates, and others find themselves unable to do so due to equity constraints.

“The coming months are likely to be dominated by seasonal factors rather than underlying change.”