The mortgage market shrank again in May as homebuyers continued to struggle with tighter lending conditions, the Council of Mortgage Lenders said.
Gross mortgage lending fell two per cent to £25.5 billion in May from £26.1 billion in April, and was down 19 per cent from £31.5 billion in May last year.
The CML said given official mortgage approval figures remain weak – a gauge of future demand – monthly lending levels are likely to remain below year-earlier levels.
“The next few months will remain very weak for house purchase activity for the funding reasons which are now well rehearsed,” said Michael Coogan, director-general at the CML. “We still await signs of the Bank of England’s Special Liquidity Scheme helping ease the current logjam.”
In its commentary accompanying the figures, the CML said there will not be much change in the mortgage market in coming months.
“But, providing the authorities manage to free up the credit markets, we anticipate an improvement later in the year,” the council said. “At the same time, the Bank of England finds itself under pressure as global events cause inflation to rise, and economic growth to slow.”
The CML said the housing situation “is not as gloomy as headline writers might have one believe”. While conditions are more difficult and a rise in borrowers falling behind on repayments is expected, the vast majority are in a strong position.