Mortgage lending fell in the month of August which was a surprising result since lenders have been offering many more attractive deals for those seeking a cheap mortgage or remortgage.  It is expected that the levels will increase once the full impact is felt from the new Funding for Lending occurs.  Lenders have access to a government backed program that allows them to borrow at cheaper rates than can be found from the global lending market.  This is keeping funds readily available to borrowers and at cheap rates.  It is expected to help borrowers but may take a while to show its true assistance in helping the lending and housing markets.

The Council of Mortgage Lenders released their latest data information and it revealed that gross mortgage lending fell in July to £12.6 billion which was slightly lower than the £12.7 billion recorded for June. 

CML chief economist Bob Pannell said, “House purchase activity continues to be a little above year-earlier levels, but the housing numbers are far from strong.

Economist Howard Archer from Global Insight said the decline of mortgage lending levels shows that the market is still struggling as borrowers find it hard to secure lending approvals.  He said, “This reinforces our belief that house prices are likely to trend modestly lower over the latter months of 2012 and very possibly beyond. Specifically, we expect house prices to fall by at least 3pc from current levels.

“We expect house prices to trend modestly lower in the face of limited activity, low and fragile consumer confidence, and muted earnings growth. Furthermore, the housing supply-demand balance currently seems to be in favour of sellers overall.”