Reports of a rise in mortgage lending

The May Statistical Release from the British Bankers Association is being reported as a “Steady rise in mortgage lending” but upon closer inspection this is not quite all the figures say.

The BBA release does indeed confirm an increase of £2.3bn in the TOTAL amount of mortgage money lent over the figure 12 months ago (now £597.8bn) but goes on to say that gross mortgage lending for May is DOWN 50.7%

The British Bankers Association report is a woeful attempt to cover up the shockingly poor lending figures for May. By concentrating on the total amount of money they have lent (£597.8bn) which has not surprisingly increased over the past year they have conveniently tried to hide the fact that total mortgage lending in May was down a staggering 50.7% to just £7.7bn. While banks lent a further £2.3bn, home owners have seen the value of their properties fall by 25% (according to The Halifax) since the peak of the market two years ago.

“Net lending is now running at a level which is nearly half the long term average before 2008 and confirms my concerns that we are a long way from seeing house prices stabilise. These figures prove that banks are still not lending in anything like enough volume despite the billions pumped into them by tax payers. With so few buyers able to raise the required deposit averaging 25% it’s not surprising that house prices continue to fall despite a dearth of new properties coming onto the market.

The problems of the housing market have been blamed on everything from Home Information Packs to MP’s expenses but the simple fact is that until buyers can borrow sufficient money on affordable terms then house prices, already down a quarter since the peak will continue to fall – perhaps by as much as 25%.