Mortgage lending drops in May

Thursday 18th June 2009, 11:00AM BST.

Mortgage lending drops in May Mortgage lending fell two per cent during the month of May, new figures from the Council of Mortgage Lenders (CML) published today show.

During last month the gross lending totalled £10.3 billion, down from £10.5 million the previous month and a dramatic 58 per cent lower than 12 months ago.

The drop represents a decline in lending to people changing their mortgage provider, CML reports.

The group claims remortgaging has dipped in recent months due to attractive standard variable rates and tighter lending criteria.

Commenting on today’s figures, Paul Samter, an economist at CML, said: “While recent signs from the housing market have been more encouraging, we do not anticipate a significant recovery in activity in the coming months.

“Lending volumes appear to have stabilised at extremely low levels, but the weak labour market and lenders’ limited access to funding will constrain activity for some time yet.”

He added: “Underneath the headline gross lending figure, it’s likely that a moderate improvement in house purchase lending in May has been offset by very low remortgaging volumes as borrowers stay with existing deals.”