Mortgage lending sees strongest June figures for eight years
Mortgage lenders have recorded their strongest figures for the month of June for eight years, but cautioned that housing market activity is likely to soften.
The Council of Mortgage Lenders (CML) said around £20.7 billion of mortgages were handed out in June, a 16% increase compared with May's total of £17.8 billion.
The value for June was 3% higher than the £20.1 billion for the same month last year.
The CML, which represents banks and building societies, said the latest lending total was the highest for June since the £22.6 billion reached in 2008.
The latest figure took the estimated value of mortgages handed out in the second quarter of 2016 to £56.1 billion. This is 10% lower than the first quarter of the year, but still 8% higher than the second quarter of 2015.
Low interest rates have led to a string of mortgage price wars in recent years, giving home owners a broad range of cheap deals to choose from.
The CML's figures were released as Yorkshire Building Society unveiled a new 10-year fixed-rate mortgage, which it said was a response to "strong customer demand" for longer-term deals following the vote to leave the EU. The decade-long deal has a rate of 2.89% for borrowers with a deposit of 25% or larger.
Financial information website Moneyfacts confirmed the rate is the lowest on the market for a deal of this kind for borrowers with this size of deposit.
The Bank of England defied predictions by keeping the base rate on hold at 0.5% in July, but there have been suggestions that a rate cut may come next month, potentially making some borrowers' costs even cheaper.
CML senior economist Mohammad Jamei said: "The result of the EU referendum is likely to affect the housing market, but there remains considerable uncertainty.
"Although mortgage firms have ample lending capacity, activity levels are likely to bear the brunt of any market adjustment over the next six months or so, as buyers and sellers wait to get a clearer idea of where we might be headed."
As well as the EU referendum, a stamp duty hike for buy-to-let investors has caused some disruption to the housing market. The increase came into force on April 1 and investors rushed to snap up properties before the deadline. This meant sales were bunched up earlier in the year and some may otherwise have taken place later.
Mr Jamei continued: "As with the economy, the UK housing market's starting position is relatively favourable, with transactions having increased by almost 80% from post-crisis lows. Over the next six months, activity is likely to soften modestly, while lending will be driven more by remortgaging and less by house purchases.
"We also expect some form of monetary easing to be undertaken by the (Bank of England's) Monetary Policy Committee when it meets on August 4, given the uncertain outlook that has set in after the vote result."