With demand for property in the UK continuing to outpace supply, gross home lending increased 14% year-on-year and hit the highest level for May in eight years.
- Gross mortgage home lending reached its highest level for the month of May since 2008
- Banks across Britain approved over 42,000 mortgages for house purchases in May, an increase of almost 3,000 on April
- Market fundamentals underpinning house prices remain, with the supply-demand imbalance set to continue
Gross mortgage lending in the UK increased by 4% month-on-month in May.
Lending reached £18.2 billion, some 4% higher than April’s £17.6 billion and 14% higher than May 2015, the latest data shows.
The figure from the Council of Mortgage Lenders, which represents the vast majority of home lenders in the UK, was the highest May figure since 2008 when gross lending reached £23.7 billion.
British banks approved 42,187 mortgages for house purchases in May, up from 39,967 in April.
Adam Tyler, Chief Executive Officer of the National Association of Commercial Finance Brokers (NACFB), stated: “The structural imbalance between supply and demand is as strong as ever. Demand naturally tapered off in the buy-to-let sector following the stamp duty surcharge but it may experience a bounce after Friday’s referendum result.”
CML Senior Economist Mohammad Jamei added: “Market fundamentals underpinning house prices still look sound, especially given the current supply demand imbalance.”
Markets are currently indicating a 50% chance of an interest rate cut in July, with some economists expecting the Bank to cut rates to 0.25% or even to zero from the current record low of 0.5% in the coming months.
The current market could benefit private rented sector investors who once again look to bricks and mortar as a safe investment. With the Bank Rate now more likely to go down than up in the near term will provide further support to the property market.