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Mortgage market to remain flat

Mortgage market to remain flat

Category: Mortgages

Updated: 20/06/2011
First Published: 20/06/2011

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The amount of mortgage lending carried out picked up in May, but is expected to remain flat for the rest of 2011.

Figures from the Council of Mortgage Lenders (CML) show that around £11.3 billion was lent to homebuyers last month, a 12% rise on April (£10.1 billion).

However, comparisons with April are misleading as the Royal Wedding and back-to-back bank holidays made for a particularly quiet month.

The May figures mean that lending returned to a similar level as was recorded in March.

The housing market has struggled to build any meaningful momentum in 2011 so far, and the CML said that homeowners are now less likely to remortgage their homes, as the prospect of a rise in the base rate has fallen.

Weak activity in the housing market reflects uncertainty about the wider UK economy, with a growing number of young people giving up on the hope of owning their own home in the near future.

The CML said that 'stripping away seasonal effects, the underlying position has essentially been flat for the past two years'.

Michael Coogan, director general at the CML, said the May figures had been helped by low levels of activity in April.

"Distorting effects from Easter and bank holidays cloud the current picture, but the likelihood seems to be for essentially flat levels of lending over the next couple of months," he added.

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