Mortage Lending

Mortgage lending remained largely unchanged during August as homeowners continued to obtain loans for purchasing houses, according to the latest data from the Council of Mortgage Lenders (CML).

Some 52,317 mortgages were approved for house purchase in line with the figure recorded in July and above the previous six-month average as remortgage loan approvals hit 29,059, below the 33,880 recorded during the previous month.

Commenting on the data, Council of Mortgage Lenders' economist Paul Samter said that for the first time in the last eight months, net lending achieved a positive result as it totalled £5.5 billion.

"Housing market activity has flattened off, but remains stable and well above the very low levels seen a year ago," he said, adding that improvements will continue to be hampered by the weak economy and constrained lending capacity.

The month also saw gross lending by the 52 building societies in the UK reach £1.5 billion, with loan approvals by the organisations totalling £1.3 billion.

Reacting to the figures, Building Societies Association director-general Adrian Coles commented that the market is still underperforming compared to previous years.

"Gross lending was subdued in August, but appears to be at broadly similar levels to recent months after seasonal factors are adjusted for," he explained.

"Despite signs of a modest improvement in market conditions in recent months, activity will not return to normal levels until funds for mortgage lending are more widely available to building societies and other lenders."

Simon Rubinsohn, chief economist at the Royal Institution of Certified Surveyors, also weighed in saying that despite net lending remaining below pre-credit crunch levels, "it is reassuring that the negative reading recorded in July proved to be a one-off".

New buyer enquiries' data from the organisation suggest that demand for mortgages continues to expand steadily, although scarcity of appropriate properties on the market is holding back potential purchasers.

The news comes as further lending to first-time buyers was unveiled by HSBC, which announced that it is expanding its 90 per cent loan-to-value (LTV) mortgages with the addition of new products.

According to moneysupermarket.com, the bank is now the cheapest lender offering 90 per cent LTV in the market, although its fees are more expensive compared to its competitors.

The website's mortgage spokesperson Hannah-Mercedes Skenfield commented that HSBC has been "one of the most visible players in the mortgage market" throughout the credit crunch because it provided lending through a variety of products as rivals floundered.

"HSBC's commitment to further lending to first-time buyers is an indication of its belief in this part of the market," she said.

"The last year has seen lenders place far too much emphasis on equity over affordability, and so it is encouraging to see HSBC grow its 90 per cent LTV lending book."