Mortgage lending soared to a seven-year high in July as the housing market continued to gain momentum, figures showed today.
A total of £22bn was advanced during the month, the highest level since July 2008, according to the Council of Mortgage Lenders (CML).
The group said the figure, which was also 9 per cent above lending in June, was in line with its expectations that mortgage advances would strengthen during the second half of 2015, following a subdued start to the year.
Activity in the housing market was muted in the run up to May’s General Election as many potential buyers adopted a ‘wait and see approach’, but it has bounced back following the Conservative victory.
Mohammad Jamei, CML economist, said: “We expect lending activity in the rest of the year to be underpinned by improving economic fundamentals, but kept in check as any upward pressure on house prices further stretches affordability for some buyers.
“Today’s data is in line with our forecast that gross lending will rise to £209bn this year, 3 per cent higher than in 2014.”
Meanwhile, Government figures also released today showed a fall in the number of new build homes being built.
Only 33,280 new properties were started in England during the three months to the end of June, 14 per cent fewer than in the first quarter of the year and 6 per cent down on the same period of 2014.
Within the total, the number of private homes being built dropped by 12 per cent quarter-on-quarter, while housing association starts dived by 23 per cent.
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House building levels are now 94 per cent higher than the trough they reached in March 2009, but the recovery still has some way to
go, with completions 26 per cent below the peak seen in 2007, before the credit crisis struck.
On a brighter note, the number of properties that were completed increased slightly compared with the beginning of the year, edging up by 4 per cent to 35,640, while they were 22 per cent higher than in the second quarter of 2014.
But only 131,060 new homes have been completed in the 12 months to the end of June, around half the estimated 250,000 properties that need to be built annually to keep pace with demand.
Jan Crosby, head of housing at KPMG, said: “The total of 73,580 homes started so far this year means we are on track to fall significantly short of the 250,000 homes a year we need.
“Recent Government announcements around releasing brownfield land and relaxing planning laws should help boost supply as they come on line, but much more needs to be done.
“While the £10m set aside in the recent Government Starter Homes announcement to prepare brownfield sites for building can only be welcomed, had that money been instead put towards funding additional planning officers it would have a much bigger impact.”