UK mortgage lending drops

Many first time buyers have been priced out of the market

Mortgage lending has fallen during April, raising expectations that the UK housing market may be cooling off.

The Council of Mortgage Lenders (CML) said total gross mortgage lending in April was £9.4bn, compared with £10.7bn in March.

Lending to house buyers fell to £6.6bn from £7.1bn in March, while remortgaging fell to £2.3bn from £2.8bn.

But CML director general Michael Coogan cautioned: "It is too early to say whether this heralds a slowdown in the housing market."

"Expectations of further interest rate increases have lessened recently and the CML believes that this will help buoyant market conditions to continue for some time," he added.

Rate rises on hold?

The Bank of England has raised interest rates twice this year, but then decided to leave rates on hold in May.

Many analysts believe the bank will not raise rates in the near future, encouraging prospective house buyers to keep searching for their ideal home.

However, the British Bankers' Association believes that mortgage lending has peaked.

Tim Sweeney, director general of the British Bankers' Association, said: "April was not as strong as the underlying rise in March, so it raises the question of whether we have seen the peak. Next month's figures will be an important indicator."

The average first time buyer borrowed £61,913 in April while second-time buyers borrowed an average of £81,168.