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Latest News » Mortage lending falls again

Mortgage lending fell by 2% in May inspite of ongoing signs that the housing market is on its way to recovery.

£10 billion was loaned out in may, down from £10.5billion in April and 58% lower than last May, according to the Council of Mortgage Lenders.

It is said the decline in lending was likely to have been caused by a further fall in remortgages offsetting a pick-up in loans to people buying a new home.

In April, the latest month for which a breakdown is available, only 34% of advances were given to people who were remortgaging - the lowest amount of such since December 2007.

At the same time, lending to people buying a property jumped to 43%, a level last seen in August 2007.

Low interest rates are putting many people off remortgaging, as the standard variable rate, which they revert to at the end of a fixed-term deal, is often lower than the remortgage rates available.

The lending figures contrast with a recent run of positive data on the housing market, with both Halifax and Nationwide reporting price rises during May.