Highest May mortgage lending since 2008

Gross mortgage lending last month reached its highest May figure since 2008, new figures show.

The Council of Mortgage Lenders estimated that lending was £18.2 billion last month, 4% higher than April (£17.6 billion), and 14% higher than May 2015 (£16 billion).

This is the highest lending has been in May since 2008 when gross lending reached £23.7 billion.

Mohammad Jamei, CML senior economist, said: “As expected, lending continued to be somewhat dampened in May, reflecting the earlier rush in the first quarter to beat the stamp duty change on second properties.

“Looking ahead, there is likely to be considerable uncertainty as a result of the EU referendum decision. We expect this to affect sentiment and reduce activity below levels that would otherwise be expected in the near term, as both buyers and sellers adopt a wait-and-see attitude until the dust begins to settle.

Jamei said that he did not expect “significant” house price falls, especially given the current imbalance between supply and demand.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Of more concern now is how the markets react to the referendum result. In the short term, not a great deal will change. Mortgage availability is good, banks still want to lend and interest rates are at an all-time low.

“The remortgage market is likely to continue to be aggressive with some competitive deals to attract borrowers, particularly as the likelihood of an interest rate rise has been pushed further back.

“However, when there is uncertainty it affects confidence and people put off making decisions. Those who were thinking about buying property may now decide to leave that decision to say next year, in the hope that property prices will fall in the meantime.

“The luxury end of the housing market is likely to be impacted. Some buyers may try to renegotiate deals that have already been done but on the other hand if sterling looks cheap it may attract more overseas investors.”