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New mortgage lending up £3.3bn in November

New mortgage lending increased £3.3bn in November, compared to a £3.2bn monthly increase in October, according to the British Bankers’ Association.

Gross lending, however, was 12 per cent lower than a year ago, which the BBA says is due to the lack of remortgage activity.

The BBA says gross lending is unlikely to increase from its current level until the remortgage market returns.

BBA statistics director David Dooks says: “In the housing sector, prices have continued to edge up and approvals for house purchase are now back at a similar level to that of two years ago.

“Re-mortgaging activity continues to run at a low level as borrowers revert to low standard variable rates or trackers from maturing fixed rate loans.

“Lending to non-financial companies ticked up slightly in November, having declined in each of the previous two months.”

The Royal Institution of Chartered Surveyors senior economist Oliver Gilmartin says: “Today’s numbers add further weight to our view that house prices will continue to move higher during early 2010.

“Lending from mainstream banks has returned to levels last seen two years ago, although remains around 30 per cent below the levels pre dating the credit crunch.

“The rise in demand continues to outstrip supply, although recent indications are that potential vendors that became “reluctant landlords” at the start of the downturn, may be taking this improved pricing environment to place properties for sale.”

He adds: “There are growing concerns that current momentum in the market will see house prices move close to pre crises highs in 2010 stretching affordability further.

“However, RICS expect the market to take a reality check in the second half of 2010, as longer term borrowing costs start to rise pushing the costs of funding for fixed rate mortgages upwards. But, despite some moderation in the second half of the year, house prices could well end the year marginally higher.”

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