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19 June 08 - Level Of Mortgage Lending Drops
Mortgage lending resumed its downward trend during May
as house price falls continued to impact on the market,
figures have shown.
A total of £25.5 billion was advanced during the
month, 2% less than in April and 19% less than in May last
year, according to the Council of Mortgage Lenders.
The latest fall comes after lending levels improved slightly
during April, rising by 8% compared with the previous month.
But the group warned that lending looked set to be subdued
in the coming months, with borrowing by people buying a
home expected to remain "very weak".
The CML said lending activity was likely to be strongly
focused on the remortgage market, with an estimated 1.4
million people coming to the end of short-term fixed-rate
deals this year.
Despite the current problems in the mortgage market, it
still expects to see a 2% jump in remortgaging levels by
volume during 2008 to 1.08 million.
But it recently warned that the number of loans advanced
to people buying a home were set to fall by 35% this year
to just 770,000.
Michael Coogan, director general of the CML, said: "The
remortgage market remains on track to meet our forecast
for growth this year, demonstrating the resilience of the
market despite recent bad news.
"However, by comparison, the next few months will
remain very weak for house purchase activity for the funding
reasons which are now well rehearsed.
"We still await first signs of the Bank of England's
Special Liquidity Scheme indirectly helping to ease the
current logjam."
News items supplied by SelectNews, produced by PA Business,
part of the group that owns The Press Association, the UK's
national news agency. Copyright (c) PA Business 2007.
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