The latest figures from the Council of Mortgage Lenders (CML) – which represents 95% of all the UK’s mortgage lenders – show that mortgage lending in May was over one fifth higher than the preceding month and almost one fifth higher than in the previous year, marking the highest estimated gross mortgage lending for any month since October 2008.
Writing in the CML’s monthly market commentary its chief economist, Bob Pannell, suggests that this, along with other recent survey evidence, suggests the “strengthening” of property purchase activity.
“The imminent change of guard at the Bank of England takes place against the backdrop of a modestly improving UK economy, albeit one that appears to rest upon a pick-up in consumer spending and a recovering housing market.
“Funding conditions, helped by the funding for lending scheme, continue to look favourable and are supporting more competitive mortgage pricing and availability and a gradual resumption of lenders’ risk appetite.”
Bob Pannell, Chief Economist at CML.
The commentary suggested that the FLS has had a beneficial impact on individual lending, citing a recent report from the Bank of England. Whilst net mortgage lending has increased by between £3 and 4 billion, the availability of high LTV mortgages and low mortgage rates has also risen since the scheme was announced.
This news comes as ratings agency Standard & Poor’s announce the widening of the equity gap between the North and South of the UK in a new report. Whilst the report estimated a 12.5% decrease in the number of people in the UK currently stuck in negative equity in the first three months of 2013, it noted that the fall was most pronounced in the South of the UK, and that in North as a whole, the figure had actually inched upwards.
Whilst one in 10 mortgage borrowers in North West are in negative equity, the report suggests, the number in London and the South East is only one in 100.