Mortgage lending still subdued, UK lenders say
UK mortgage lending remains subdued, according to the Council of Mortgage Lenders (CML).
Its comments came as it said the amount lent in new home loans rose by 7% in May from the previous month to £11.3bn.
Although that was up 10% from a year ago, the level of new lending this year has been low by historical standards.
The CML said higher taxes and public spending cuts to be announced in next week's Budget would probably subdue mortgage lending further.
"The market will inevitably be affected by how policy impacts on the wider economy - particularly on household finances and confidence," said the CML's economist Paul Samter.
In the latest edition of its monthly publication "Trends in Lending", the Bank of England said that lenders expected mortgage borrowing to remain "broadly flat" in the next few months.
"Contacts of the Bank's network of agents reported that demand for housing, especially among first-time buyers, continued to be constrained by tight credit conditions," it said.
"There has been an increase in the number of advertised products, including for loan to value (LTV) ratios of over 75%, which are often used by first-time buyers.
"However, the median LTV ratio on new loans to first-time buyers has changed little over the past six months," the Bank pointed out.
Despite the throttling of new lending due to the continued credit squeeze being experienced by banks and building societies, house prices have risen this year, according to most surveys.
The government's own survey, compiled by the Department for Communities & Local Government (DCLG), suggested this week that prices had risen by 10% in the past year.
The explanation put forward by most analysts is that prices have been pushed higher by a shortage of homes being put up for sale.