Mortgage lending hit as slump continues

Mortgage lending fell last month as an expected spring resurgence in housing market activity failed to materialise.

Total mortgage lending of 9.8 billion in April was down from 11.4bn the previous month and 5 per cent from April 2010, the Council of Mortgage Lenders (CML) has revealed. It was the fifth decline in seven months as the housing market continued to stagnate. House price indices also ticked downwards in April.

The CML claimed the figures were affected by a late Easter and the extended Bank Holiday weekend at the end of April. Bob Pannell, chief economist at the CML, said: "This represents an unfortunate temporary loss of signal, at a time when it would be useful to gauge the resilience of house purchase demand to economic uncertainties and the pressure on household incomes.

"Levels of activity look set to remain broadly flat over the near-term. It now seems unlikely that interest rates will rise much, if at all, this year and this should help keep the market on an even keel."

But Howard Archer, chief UK and European economist at IHS Global Insight, said the latest update suggested house prices were set to fall over the coming months.

"We suspect that further modest falls in house prices are more probable than not over the coming months as tighter fiscal policy and the possibility of gradually rising interest rates before the end of 2011 maintains pressure on the housing market," he said.