Mortgage lending jumps by a fifth

Mortgage lenders have reported one of their strongest months since 2008 in a further sign that Government efforts are prompting an upturn in the housing market.

The Council of Mortgage Lenders (CML) estimates that £12.1 billion worth of loans were advanced in April, marking an increase of one fifth (21%) year-on-year.

The total also represents a 4% increase compared with March and follows a string of studies indicating that Government initiatives to reinvigorate mortgage borrowing are having an impact.

CML chief economist Bob Pannell said: "The true underlying position is that April is likely to have been one of the strongest months for lending activity since late 2008."

The findings were released as official figures showed that house prices rose by 0.4% month-on-month in March to reach £235,000 on average, marking the first monthly increase seen this year.

House prices are now 2.7% higher than they were a year ago, following a smaller annual uplift in February, the Office for National Statistics figures showed.

The CML has reported an uplift in first-time buyer activity in recent months, helped by various Government schemes designed to make it easier for people to borrow.

The number of mortgages on the market has increased sharply and lenders have slashed their rates since a Government scheme called Funding for Lending was introduced last August. Other initiatives called NewBuy and Help to Buy are specifically aimed at giving people with smaller deposits a leg up.

The CML's previous figures have shown that first-time buyers accounted for 45% of all house purchase loans in March, up from 43% in February.

However, Mr Pannell pointed out that the sharp year-on-year rise recorded by the CML has been "flattered" by a temporary dip in activity this time last year which happened after a stamp duty concession for first-time buyers came to an end.

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