Published on : Sat, 19 Nov 2005 11:04GMT
by : David Parker

LONDON - The latest figures for the month of October show that the mortgage lending market was relatively stable signaling that the housing market is showing positive signs of growth.

Data from the Council of Mortgage Lenders (CML) showed that gross new lending in October fell by 3 percent to £27 billion in October. But this figure was still 16 percent more than the figures recorded in October last year.

The current figure was one of the highest lending on record. "The resilience of lending activity in recent months contrasts sharply with the ongoing uncertainty about household finances and consumer confidence," said CML director-general Michael Coogan. "We believe the housing market will stabilize around current levels." Coogan added that the Bank of England figures due to be released later this month would "probably show that lending is close to the peak levels of two years ago."

In separate figures, the British Bankers Association (BBA) said that overall lending in the month of October jumped by another £4.3 billion. Fresh credit card borrowing also registered a marginal increase of £243 million. The BBA was of the opinion that this was due to a small increase in retail sales.

"While October’s underlying net mortgage lending was slightly weaker than September, the monthly trend averages around £4.4 billion, as it has done throughout 2005," David Dooks, the BBA's director of statistics said.. "This reflects the steady state of a mortgage market which shows little prospect of concerted movement either upwards or downwards in the near term"

Analysts are of the opinion that although the rate cut by the Bank of England had helped stabilize the housing market, there were no signs of a return to boom time. "Not only is mortgage activity still well below recent past peak levels, but most affordability ratios are still stretched and will become more so if house prices start moving back up markedly," said Howard Archer, economist at Global Insight.