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Mortgage lending rises to new record in May

Mortgage lending continued to boom in May, with Council of Mortgage Lenders&#39 figures showing that gross advances rose by 19 per cent to £19.5bn from £16.4bn in April and by 43 per cent from £13.6bn in May 2001.

The Building Societies&#39 Association says gross adv-ances by members rose by 27 per cent to £3.4bn in May from £2.7bn in April and by 54 per cent from £2.2bn for May last year.

According to the CML, loans for house purchases inc-reased to £12bn in May, the highest recorded monthly figure, a rise of 30 per cent from £9.2bn in April and 41 per cent from £8.5bn in May last year.

It says although remortgaging remained strong – up to £6.4bn last month from £6.3bn in April and £4.2bn in May 2001 – it accounted for only 33 per cent of total lending compared with 38 per cent in April.

House purchases accounted for 62 per cent of the market in May compared with 56 per cent in April. The CML says this is the main stimulus behind the booming housing market.

Director general Michael Coogan says: “With rates at historically low levels, a modest rise in interest rates this summer would help ensure that the housing market is sustainable in the future without causing payment difficulties for the overwhelming majority of borrowers.”


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