Housing market echoes flat economy, says CML
Activity in the UK housing market was subdued in August as the economy was flat and household confidence low, lenders have said.
Gross mortgage lending fell slightly from £12.7bn in July to £12.6bn in August, the Council of Mortgage Lenders (CML) said.
This was 4% lower than August last year, the lenders' group said.
It predicted that new schemes to encourage lending could inject some life into the market.
These included the NewBuy scheme, which aims to match newly built properties in England with buyers unable to offer a large deposit.
More significant, the CML argued, would be the Funding for Lending scheme, in which the Bank of England will lend money at below-market rates to the financial institutions in order for them to lend the funds to potential homeowners and businesses.
"The scheme is a bold move that has the potential to greatly influence the course of the housing market over the next year or so," said CML chief economist Bob Pannell.
"While not a panacea for all housing market problems, the scheme does offer the potential to improve the lending environment. Unfortunately, it will be towards year-end before any initial assessment of its impact can be reached."
But there have been some reservations about the scheme.
"The Funding for Lending scheme is bold but there has also been a fair bit of bluster," said Ashley Brown, director of mortgage broker Moneysprite.
"It may have triggered some activity but unfortunately none of it has been in the right areas. It has seen better deals for the people who do not really need them, and little of note for those that do."
In the meantime, the CML is reporting a slow market at present.
"This should not be a big surprise, during a period when the UK economy is pretty flat and household confidence is in the doldrums," Mr Pannell said.