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Mortgage lending up by 21% year-on-year

Mortgage lending up by 21% year-on-year

Category: Mortgages

Updated: 21/05/2013
First Published: 21/05/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Gross mortgage lending has risen since April 2012 by an estimated 21%, according to new data released by the Council of Mortgage Lenders (CML).

The total value of home loans advanced last month stood at £12.1 billion, up from £11.6 billion in March and representing a 4% monthly increase.

Activity in the housing market has been buoyed by the introduction of various lending initiatives by the Government over the past year, most notably the £80-billion Funding for Lending Scheme.

Under the scheme, the Government offers banks and building societies low cost funds at a fee of 0.75% above Bank Rate, currently 0.50%, over a four year period, under the condition that the money is used to offer lower and more accessible loan and mortgage rates.

Mortgage rates have fallen dramatically since the scheme's launch last August. Today a typical two-year fixed mortgage rate stands at 3.82%, compared with 4.66% in May 2012.

Chief economist at the CML, Bob Pannell, said: "The comparison with April last year, 21% higher, is flattered by the temporary dearth of house buying activity immediately following the closure of the stamp duty concession.

"The true underlying position is that April is likely to have been one of the strongest months for lending activity since late 2008, but not as strong as the year-earlier comparison suggests. Gross lending on a seasonally adjusted basis has been running comfortably above £12 billion for several months, but this is still barely half the average level of lending seen in 2003-4."

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