This is the first year-on-year increase since August 2010, although comparisons with the beginning of last year are distorted as some households brought forward house purchase activity in the closing months of 2009 to take advantage of the stamp duty concession expiring at the end of the year.
CML economist Peter Charles said: “The Bank of England’s Inflation Report this week noted that the UK banks face a significant funding challenge over the next couple of years: in total, including funding supported by the public support schemes, around £400 billion to £500 billion of wholesale term debt is due to mature by the end of 2012. This implies that, even in the unlikely event of a marked upturn in mortgage demand, the level of activity in the mortgage market can be expected to remain constrained.
“As a greater degree of equilibrium is restored to financial markets, the availability of funding for mortgage lending should improve from current levels to support more normal levels of activity. However, the unprecedented expansion of wholesale funding, and hence mortgage lending, experienced in the mid 2000s is unlikely to return.”
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