6% boost in mortgage lending in August
Mortgage lending stood at an estimated £13.4 billion in August, up 6% from July, according to the Council of Mortgage Lenders (CML).
Last August, mortgage lending stood at £12.6 billion, an increase of 10% year-on-year, with lenders citing seasonal factors behind the rise. The CML adds that August's lending marks the highest monthly total since July 2009.
Bob Pannell, chief economist at the CML, says: "Much of the recent variation in monthly lending figures appears to have reflected seasonal factors, with the underlying picture being one of activity levels that continue to be subdued but broadly stable."
He adds that August's figures "offset the weaker than expected" July figures. "Taking July and August together, lending has shown little change on the same months of 2009 and 2010."
Brian Murphy, head of lending at the Mortgage Advice Bureau, comments: "After a July which saw the mortgage market blanketed in some very grey clouds, optimists will no doubt rush to see a silver lining in this August data."
He adds that as interest rates and house prices have become "more attractive", more mortgages are being taken out. However, "the economy is still delicate and confidence is far from robust but increasingly there are more reasons to buy than not to buy, especially with interest rates now looking to be set in stone for at least another year", he says.
David Whittaker, managing director of Mortgages for Business, says the present low interest rate environment and the strong rental market have led to buy-to-let investors capitalising on low house prices and high yields.
"While lending to first-time buyers remains subdued, thousands will remain reliant on the private rental sector and landlords will continue to take advantage of the opportunities to increase their presence in the market," he says.
Murphy concludes: "The market, as the CML rightly observes, is still down historically but it is by no means out."
This article was written for our sister website Money Observer
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.