Mortgage lending 'slowing down'

Mortgage lending is starting to slow down, say the CML

Mortgage lending is slowing down as the property market cools off, says the Council of Mortgage Lenders (CML).

Total lending was £31bn in May, 12% higher than in April and 5% higher than a year ago.

The CML says this rate of growth was slower than earlier in the year, when mortgage lending was rising annually by between 12% and 15%.

The figures chime with surveys which show house prices slowing down under the impact of higher interest rates.

Higher borrowing costs

Both the Halifax and Nationwide house price surveys show that house price inflation has reached a plateau at between 10% and 11%, after the Bank of England raised interest rates four times in the past year.

"While today's lending figure is a new record for the month of May, it does indicate that the market is slowing down following the rapid and sustained growth we saw last year," said CML director general Michael Coogan.

The effect of higher interest rates has also been helping to depress the public's appetite for spending on credit cards.

This was reflected in figures from the British Bankers' Association (BBA), which showed that credit card borrowing has continued to subside.

The BBA's members said last month that people paid off more of their old debts on credit cards than they took out in new loans, with the total stock of credit card lending by the banks falling in May by £409m.

David Dooks, the BBA's director of statistics, said: "People still seem to be managing their finances soundly, with borrowing on plastic cards falling for 10 out of the last 12 months."