Mortgage lending falls by a fifth

Mortgage lending in May was down by almost a fifth compared to the same period last year, according to figures from the Council of Mortgage Lenders.

Gross lending for the month totalled around £25.5bn, down only 2% from April but by 19% since the £31.5bn high in May 2007.

The body, which represents banks and building societies, said activity was strongly focused on the remortgage market.

Michael Coogan, CML director general, said: “The remortgage market remains on track to meet our forecast for growth this year, demonstrating the resilience of the market despite recent bad news.

“However, by comparison, the next few months will remain very weak for house purchase activity for the funding reasons which are now well rehearsed.”

He added that the body was still awaiting first signs of the Bank of England’s Special Liquidity Scheme, which enables banks and building societies to temporarily swap assets for UK Treasury Bills, helping to ease the current 'logjam'.