Mortgage lending slowing down

20 June 2007

There’s new evidence that mortgage lending is slowing down as the property market cools off. 

According to the industry body, the Council of Mortgage Lenders (CML), total lending was £31 billion May.  That’s 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%.

These figures corroborate other surveys, from mortgage lenders the Halifax and Nationwide, which show house prices slowing down under the impact of higher interest rates.  The lenders’ most recent surveys showed that house price inflation reached a plateau at between 10% and 11%, after the Bank of England raised interest rates four times in the past year.

CML director general, Michael Coogan, said:  “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.”

The effect of higher interest rates has also been helping to depress people’s appetite for spending on credit cards.  This was reflected in figures from the British Bankers’ Association, which showed that credit card borrowing has continued to go down.