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Mortgage Lending Bounces Back

 

The most recent results released by the Council of Mortgage Lenders have suggested that the mortgage market is now bouncing back after two months of reduced lending. The amount of money lent to homebuyers last month was the highest for October since 2007, and it was 8% more than was lent in the October of last year. It reached a total of £19 billion for the month.

The rise in lending during the last month also marked a change in direction from the decline that was experienced in the early autumn. The previous two months had both seen a decline in the amount of mortgage lending, which has now been reversed. Lending in October was 5% higher than it was in September.

Although this apparent bounce back looks very positive, the precise cause of the rise in lending will not be properly understood until the Council for Mortgage Lending releases its detailed figures next month. The rise may have been a result of increased demand for mortgages from homebuyers moving into new properties, but it could also have been due to an increase in homeowners choosing to remortgage their existing properties. Remortgaging could have become an attractive option for many homeowners thanks to an increasingly competitive mortgage market that has recently been cutting rates. Lenders are hoping to tempt in more borrowers so that they can meet their lending targets by the end of the year.

New homeowners could also benefit from these better rates, but there is little evidence of a boost in the housing market to match the rise in mortgage lending. High prices and the expectations of interest rate rises in the near future have left potential buyers feeling cautious about committing to a mortgage. The demand from potential buyers dropped again in October, for the fourth month in a row, according to the Royal Institution of Surveyors.

The drop in demand has been matched by lower numbers of properties for sale, with many homeowners happy to stay in their current properties. This has left the property market in a fairly steady state, with property prices expected to hold steady, even as mortgage providers enjoy this boost to lending.

 
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