Mortgage lending hit its highest August level since before the credit crunch began in 2007, according to statistics from banks and building societies.
Gross mortgage lending reached £20bn in August, 8% lower than July but 12% higher than August last year, according to the Council of Mortgage Lenders.
Bob Pannell, chief economist at the CML, said the August figure was the highest since the summer of 2007, a month before the credit crisis began.
By August 2008, mortgage lending had halved and has only recovered to the same levels in the past year.
“Mortgage lending is currently enjoying its best spell since 2008, on the back of a pick-up in house purchase and remortgage activity over the summer months,” Pannell said.
“We expect further modest growth for the rest of the year, although affordability pressures are likely to limit gains for first-time buyers and home movers.”
Howard Archer, chief economist at IHS Global Insight, recently revised his forecast for 2015 year-end house prices up from 6% to 7% after the Halifax reported the highest monthly rise in house prices since May 2014. He said the CML’s figures reinforced this decision.
“Latest data and survey evidence clearly indicate that housing market activity is now on the up,” he said. “We expect support for housing market activity – and house prices – to come from very low mortgage interest rates, strengthening earnings growth, high employment and elevated consumer confidence.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said he expects mortgage lending to continue to grow for the rest of the year fuelled by a continuation of the record low rates.
“The mortgage market remains over supplied with lenders having more money to lend than there are people looking for mortgages,” he said. “This means criteria will have to loosen and rates will have to remain low to ensure lenders hit their volume targets.”
The CML figures are broadly in line with those from the bank of England released earlier in September.
These showed UK mortgage approvals rose in July to hit their highest level since February 2014.
