Mortgage lending starts to revive

Housing market may be picking up again

Mortgage borrowing picked up in September, according to major lenders.

The Council of Mortgage Lenders (CML) said total lending by its members rose to £28bn, its highest monthly figure on record, up from £26.9bn in August.

Figures from the British Bankers Association (BBA) showed that net lending, which strips out the effect of repayments, rose by £5bn last month.

But other figures from the BBA indicated that spending on credit cards continued to be subdued.

The overall total of credit card lending rose by just £100m in September, a modest rebound from August when card holders paid off more than they had borrowed.

David Dooks, the BBA's director of statistics, said: "Credit card lending continues to be very subdued, consistent with the current picture of weak consumer spending."

Housing market strengthens

The fresh data on mortgage borrowing adds to a picture of a housing market which is stabilising after the sudden slump which started in the summer of 2004.

The housing market is in relatively good health Michael Coogan, CML

Recent figures from the Bank of England showed that the number of mortgages in August approved but not yet lent - a good indicator of future trends - were at their highest since June 2004.

Commenting on today's new lending figures, Michael Coogan, director general of the CML, said: "The housing market is in relatively good health.

"Expectations of lower interest rates have undoubtedly helped trigger the recent resurgence in lending."

Earlier this week the Royal Institution of Chartered Surveyors (RICS) predicted that house prices were about to rise for the first time in 18 months, after its members reported rising demand from house buyers.

However, industry experts said only about half of all new mortgage borrowing is due to people actually moving house.

"This recovery in mortgage lending has clearly been boosted by high levels of re-mortgaging as many borrowers on the cheap two-year fixed rates of 2003 rebroke their loans to avoid a jump in their monthly mortgage payments," said Duncan Pownall of the Bradford & Bingley.