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21 September 2011

Mortgage lending subdued but stable

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by Gill Montia

Mortgage lending subdued but stable

Gross mortgage lending came in at around £13.4 billion in August, up 6% on July and having risen 10% compared with a year earlier.

According to the Council of Mortgage Lenders, the monthly total is at its highest for over two years and marks the best result for August since 2008.

However, the Council’s chief economist, Bob Pannell, reckons the underlying trend is one of a “subdued but broadly stable” market, with last month’s performance more or less offset by a weaker than expected July figure.

Taking July and August together, gross lending showed little change on the same months of 2009 and 2010.

Meanwhile, UK house prices continue to slip, with Halifax reporting a 2.6% year-on-year decline for September and fears over house price falls and negative equity growing, as the economic outlook for the UK deteriorates.

Yesterday, the International Monetary Fund (IMF) revised its growth forecast for UK GDP to 1.1% in 2011, down from 1.5%.

Next year looks little better with the IMF’s earlier 2.3% growth forecast cut to 1.6% and the bleak outlook raising concerns over levels of unemployment and affordability in the housing market.

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