Mortgage lending 'still seesawing'

The mortgage market continues to "seesaw" after new figures showed lending by banks and building societies rebounded 24% to £12.2 billion last month.

The Council of Mortgage Lenders (CML) said the result was also 13% higher than a year ago, but pointed out that by discounting the end of a two-year stamp duty concession for first-time buyers the market is broadly flat.

And with the distraction of the Olympics still to come it believes the true state of the market may not become clear until this autumn.

CML chief economist Bob Pannell said: "Mortgage lending continues to seesaw, albeit against a broadly flat market."

There are hopes that a "funding for lending" scheme announced by the Bank of England and the Treasury last week could improve conditions for borrowers.

Analysts said this may put the brakes on recent rate increases although those currently unable to get a mortgage may see little improvement.

Some wholesale mortgage rates, which banks use to underpin mortgage deals, have dropped below 1%, meaning borrowers should expect to see cheaper fixed-rate deals, broker SPF Private Clients said yesterday.

With short-term swap rates, which help to set lenders' pricing of fixed-rate deals, falling over the last week, lenders such as Nottingham Building Society and the Progressive Building Society have launched best-buy products.

However many lenders have yet to fully pass on their own increased mortgage funding costs to borrowers.