Gross mortgage lending increases in June

Gross mortgage lending totalled an estimated £12.6 billion in June. This represented a 16% increase from the £10.8 billion lent in May but was 3% lower than June 2010 (£13.0 billion), according to new data from the Council of Mortgage Lenders. This is the highest monthly total since July last year (£13.3 billion).

Gross lending for the second quarter of 2011 was therefore an estimated £33.5 billion, an 11% increase from the first three months of this year (£30.1 billion) and a 3% decrease from the second quarter of 2010 (£34.4 billion).

Lending in the first half of this year totalled £63.7 billion. This is only slightly below the first six months of 2010 (£64.1 billion).

In today's market commentary, CML chief economist Bob Pannell observes:

"The UK economy continues to experience disappointing economic growth, strong consumer price pressures, falling disposable incomes and an uncertain jobs market.

"This backdrop weighs negatively on purchase decisions relating to home ownership. By contrast, landlord activity appears to have picked up recently and, with evidence of strong rental demand, this should help to underpin activity over the coming months. 

"UK households have made progress in bringing down debt burdens over the past year or so, but this largely stems from the restricted levels of new mortgage lending, unsecured write-offs and nominal income growth. Households in aggregate are not repaying their mortgage debt more quickly.

"Recent emotive headlines on repossession prospects appear overplayed, given that the state of our economy does not warrant large interest rate rises for the foreseeable future. But we do expect to see moderately higher arrears and possessions through the second half and into 2012, as we have previously forecast."