Lending growth continues into summer

However, June lending was still 9% lower than the £28.2 billion of lending in the same month last year.

Lending for house purchase increased by 20% to £11.9 billion in June, up from £9.9 billion in May. The comparable figure for June 2004 was £13.9 billion. Lending for house purchase accounted for 46% of all lending compared to 45% in May. Within lending for house purchase, the number of loans going to first-time buyers declined to 27% from 31% in May. The number of loans going to movers increased from 69% in May to 73% in June.

Remortgaging increased from £9.3 billion in May to £10.4 billion in June. As a proportion of total lending however, remortgaging fell for the sixth consecutive month from 42% in May to 40% in June. Remortgaging in June 2004 stood at £11 billion and accounted for 39% of total lending.

The average pricing of fixed-rate products remained stagnant in June at 5.37%. However, fixed-rates accounted for 47% of all loans, which is the highest take-up since July 2003. Variable-rate pricing declined in June to 5.76% from 5.80% in May.

The figures for the second quarter of 2005 saw total gross lending increase by 24% to £69.7 billion compared to £56.3 billion in quarter one. Nevertheless, this figure is still 10% lower than at the same time last year showing that activity has not quite recovered. The second quarter of this year has also seen lending for house purchase increase by 39% to £31.1 billion compared to £22.4 billion in quarter one. Reflecting this growth, house purchase lending made up 45% of gross mortgage lending in the second quarter compared to 40% in quarter one. Over both quarter one and two this year loans to first-time buyers have remained the same at 30%.

Commenting on the figures, CML Director General Michael Coogan said: "The latest lending figures show that the market is stable. Lending for house purchase is on the increase which indicates improved buyer confidence matched by sellers' realistic price expectations. Most commentators agree that interest rates have reached their peak, and many expect rates to fall in the coming months. We agree. This will provide a modest boost for affordability and help to underpin market prospects and the attractiveness of home-ownership over the coming months."