July lending reaches 7-year high
In comparison 9% less was issued in June (£20.1bn) and 14% less was lent in July last year (£19.4bn).
The last time July’s lending was as high was in July 2008, when the industry lent £23.6bn.
The CML is currently predicting gross lending to reach £209bn this year, 3% higher than in 2014.
Henry Woodcock, principal mortgage consultant at IRESS, said: “Borrowers certainly made hay whilst the sun shone in July as the mortgage market continued to heat up, in spite of entering a traditionally slower period.
“Increased fears of an imminent base rate hike have acted as a catalyst for the remortgage market, causing many borrowers to consider moving onto fixed rates mortgages, buoying activity.
“This is certainly not a short-term holiday romance. While total lending is unlikely to hit the CML’s initial full year forecast of £222bn, we expect a strong level of lending in the final part of the year. Now that the prospect of an imminent base rate hike has receded somewhat, historically attractive rates will be available for longer, supporting buyer demand.”
Jeremy Duncombe, director of Legal & General Mortgage Club, added: “The increase is being driven by larger loan sizes as house prices increase as well as a rise in housing transactions. Although we expect the rise in lending to continue for the rest of the year, there is a danger that the market will be curtailed by a lack of supply.
“The number of properties coming onto the market either through new build or by people moving house is not keeping up with the demand from people who are looking to move. This imbalance will continue to push prices up as buyers have to compete over properties, which risks making homes less affordable.
“What the housing market needs is a greater supply of new homes. At the moment we need around 240,000 new homes to be built each year to keep up with demand. Without these new homes coming to the market, house prices will continue to rise and some people may become priced out of the market altogether.”