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Mortgage Lending Up But Recovery Is Fragile - Evening Standard

The housing market made further steps towards recovery today after mortgage lending showed its first annual increase since early 2007.

The Council of Mortgage Lenders said 56,000 loans totalling £7.5 billion were extended for house purchase in July — up from 47,000 loans worth £7.1 billion in July last year.

It was the first year-on-year increase in loans for house purchase since before the boom in the housing market of the past decade turned to bust two years ago.

However, the number was still sharply down on 96,500 loans made for house purchase in July 2007 at £15.2 billion.

CML economist Paul Samter said: “It's tempting to call the turn in the mortgage market at this point, and there is certainly concrete evidence that lending for house purchase is increasing.

“But there are still constraints affecting the lending industry's capacity to fund increased lending, as well as less consumer motivation to re-mortgage for the time being.

“The overall lending picture is likely to stay relatively subdued for some time, especially as the wider economy is far from robust as yet.”

The influential Ernst & Young Item Club also warned that increases in house prices in recent months were “a false dawn” and said values will not return to their 2007 peak for at least five years.