Signs of a solid recovery in the mortgage market, after the Council of Mortgage Lenders published figures showing gross mortgage lending hit £14.7bn in May, up a fifth on the previous month, a year-on-year rise of 17%.
It’s good news for the residential property sector, which outside London has been struggling. Bob Pannell, the CML’s chief economist, reckons the figure could have been even better, had the wet weather not deterred house hunters from pounding the pavements to look for their dream home.
The problem is that it may be entirely artificial. Borrowers have gone berserk over the chancellor’s Help to Buy scheme, which makes it easier for buyers to borrow up to 95% of the value of a property.
But critics say helping people struggling with their finances to borrow a huge amount of money isn’t exactly the wisest course of action in a debt-ravaged economy. Some lenders have warned that it’s a creating a price ‘bubble’ – while others are more explicit. A couple of weeks ago, Albert Edwards, head of the global strategy team at French banking giant Société Générale, called the scheme ‘truly a moronic policy that stands head and shoulders above most of the stupid economic policies I have seen implemented during my 30 years in this business’.
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