Mortgage lending rises as buy-to-let market activity increases

Mortgage lending rose to its highest level for nearly a year last month as landlord activity in the buy-to-let market picked up.

A total of 12.8 billion was borrowed by house buyers in June, up 16 per cent on the 10.8bn lent in May, and the highest in a month since July 2010, according to the Council of Mortgage Lenders (CML).

But the total was 3 per cent lower than June a year ago

Over the last three months, mortgage advances rose by 11 per cent to 33.5bn compared with the first quarter but was 3 per cent lower than the comparable three months in 2010.

CML chief economist Bob Pannell said uncertainties surrounding the economy continued to affect potential home buyers, though the strong rental market was sparking some demand.

"Landlord activity appears to have picked up recently and with evidence of strong rental demand this should help to underpin activity over the coming months," he said.

The CML expects higher arrears and repossessions through the second half and into 2012 but Mr Pannell added that talk of widespread repossessions was overplayed given that large interest rises are unlikely for the foreseeable future. The CML, which speaks for the lenders of 94 per cent of UK mortgages, added that over the first half of 2011, mortgage lending totalled 63.7bn compared with 64.1bn in the first six months of 2010.

Britain's housing market has struggled due to the economic uncertainty and the difficulties in getting a mortgage have prompted a surge in demand for rental properties,