UK mortgage lending falls by 20pc

Gross mortgage lending fell by 20 per cent in April, according to the Council of Mortgage Lenders .

The CML's latest estimates suggest that lending declined to £10.2 billion last month following a surge in activity driven by the end of the stamp duty holiday.

Lending fell by 19 per cent from £12.6 billion in March, adds the report, although the figures were still 2 per cent higher than April 2011, when total lending reached £10 billion

CML chief economist Bob Pannell commented: "Mortgage lending activity has been relatively buoyant in recent months, with stronger lending for house purchase underpinning the more upbeat lending picture.

"The underlying picture is likely to be a bit stronger than the April figure suggests, because some first-time buyers are likely to have brought forward their transactions to March to take advantage of the stamp duty concession that was coming to an end.

"Eurozone developments are highly uncertain and have the potential to undermine UK economic prospects and conditions in our housing and mortgage markets. The underlying picture is likely to be one of easing momentum in the housing market, but with potential for a sharper downwards correction on bad eurozone news."

Highlighting the impact of the eurozone upon lending activity, Brian Murphy, head of lending at Mortgage Advice Bureau, commented on the CML findings: "So far this year mortgage activity has been stronger than predicted, but it has now slowed. The ongoing problems in the eurozone, combined with the UK moving into recession have hit lenders and also damaged consumer confidence.

 "Looking forward we expect momentum to continue to slow but just how much will depend on what happens with these other factors. If events take over then it will be more pronounced.

 "Our National Mortgage Index mirrors the CML's findings, but it's worth noting that even with recent rate increase for many people affordability remains good."

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