Housing market at 'plateau' as mortgage rates fall, CML says

The housing market is "sitting on a plateau", a lenders' group has said, despite renewed competition between providers on mortgage rates.

Gross mortgage lending totalled £17.8bn in September, down 1% on the previous month, the Council of Mortgage Lenders (CML) said.

However, this was 10% higher than a year earlier.

The CML said any concerns that the Bank of England had about a potential housing market bubble were "abating".

It said that the surge in activity in London had slowed down.

"Recent indicators and policy actions corroborate our view of a gentle easing in market conditions. There is growing evidence that mortgage lending activity, and the housing market, are sitting on a plateau," said the CML's chief economist, Bob Pannell.

Gross mortgage lending in the third quarter of the year totalled an estimated £55.5bn, the CML said. This was 8% up on the previous quarter and a 13% increase on the same period a year earlier.

The figures come as the Bank of England's own Trends in Lending report said that net lending by mortgage lenders was broadly unchanged in the third quarter of the year compared with the previous three months.

Despite the steady levels of lending, mortgage providers have been competing over rates. Commentators suggest this has picked up after new regulatory rules introduced in April have now bedded in.

"Lenders who are behind target for the year as a result of the delays caused by the mortgage market review are cutting their fixed rates in order to catch up before the end of December," said Mark Harris, chief executive of mortgage broker SPF Private Clients.

"We expect this to continue as they look to develop a strong pipeline for next year."

Aaron Strutt, of mortgage broker Trinity Financial, said: "Many of the banks and building societies are not lending as much money as they would like and they are lowering their rates to tempt in more customers.

"Back in 2009 there was real surprise when the lenders started to offer sub-2% mortgages. Many of the lenders [now] have the ability to offer even cheaper rates.

"The lenders love topping the best-buy tables and often undercut each other to make sure they are mentioned."