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Autumn leaves mortgage lending looking robust

October figures show resilience with three months of business running at very high levels

Gross mortgage lending fell by 3 per cent in October to 27bn, according to the Council of Mortgage Lenders.

This figure is down from 27.7bn in September but is still one of the highest mon- thly lending figures on record, and 16 per cent higher than the 23.2bn total in October last year.

The CML says it would normally expect lending activity to slow down at this time of year but the modest decline in October lending suggests that the market remains buoyant. Figures to be released by the Bank of England later this month will probably show that lending on a seasonally adj- usted basis is close to the peak levels of two years ago.

The figures reflect the progressive recovery in housing transactions over the past year and continuing high levels of remortgaging as people switch to cheaper deals, says the CML.

Director general Michael Coogan says: “The resilience of lending activity in recent months contrasts sharply with the ongoing uncertainty about household finances and consumer confidence. We believe that gross mortgage advances for 2005 will reach around 280bn, similar to the levels seen in 2003 and 2004.

“The decision by the Bank of England’s monetary policy committee to hold interest rates in November was widely expected and fits in with market expectations that they will remain broadly flat in 2006. In this environment, we believe the housing market will stabilise at around current levels.”

John Charcol senior technical manager Ray Boulger says: “A 3 per cent movement either way is pretty immat- erial and I would take issue with the statement that the market tends to slow down in October. We have now had three months with lending running at very high levels and this indicates that the market is robust.”

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