Mortgage lending up 5 per cent

Gross mortgage lending increased by 5 per cent in October but the Council of Mortgage Lenders (CML) said this was down to seasonal factors rather than any underlying change.

Lending rose to £13.5bn in October, up from £12.9bn in September.

But lending figures remained 27 per cent down on the £18.5bn in October 2008, according to the CML.

“This is typical seasonal activity between September and October - the average monthly rise over the last decade has been 5 per cent,” the CML said.

It said October’s lending figures remained in line with its updated forecast for gross lending of around £141bn for 2009.

Paul Samter, economist at the CML, said: “The coming months will see a seasonal slowdown and make it difficult to assess any changes in the underlying position for several months.”

He said the CML expected only a modest improvement in the housing and mortgage markets next year.

“While we expect a slow improvement, the housing market is likely to remain subdued throughout next year as the economy gradually recovers.”

Samter said the coming months would continue to be dominated by seasonal drivers as housing market activity typically tails off at the end of the year.

But he said early indicators suggested house purchase lending would continue to be stronger than refinancing activity in the coming months.

“Seasonal factors will make it difficult to determine any underlying movements much before the end of the first quarter next year, by which point a general election will loom large and further complicate matters,” he added.