CML: Bank of England March lending data

Net mortgage lending was mildly positive at £84 million in the first quarter of this year, according to today's Bank of England lending statistics.

The Council of Mortgage Lenders' current forecast is for negative net lending of £25 billion over the year as a whole, but the CML is now cautiously optimistic that it may be possible to revise this forecast over the next couple of months.

However, prospects for any sustained improvement in net lending remain only modest. Mortgage approvals rose in March, but the number of house purchase loans approved (46,464) remains well below the number in the same month last year (61,578) or in March 2007 (133,194). On this basis, there is little prospect of any very significant volume of net lending in the near future, as net lending for the next few months will largely reflect current approvals activity in the house purchase market.

All lenders continue to face ongoing funding constraints, but at the same time consumer demand is also far from certain. With further increases in unemployment expected, and with all the uncertainties that still remain over house prices, no-one should be surprised if there is a sustained period of relatively subdued lending volumes for some time. Having said this, the plethora of initiatives designed to help and support the financial system should also begin to feed a positive effect into the market over the coming months.

Commenting on the Bank of England data, CML head of research Bob Pannell observed: "The good news is that a positive net lending outturn in the first quarter makes our £25 billion negative net lending forecast for the year look pessimistic. We anticipate revising this forecast over the next couple of months.

"But prospects remain subdued. Realistically, the most reasonable expectation is for a period of lending that stabilises but "bumps along the bottom" at relatively low levels for some considerable time."