Mortgage lending resilient in May but likely to fall post referendum - CML

Gross mortgage lending swelled to £18.2bn in May, the Council of Mortgage Lenders estimated, up 3.6% from the preceding month and 13.6% higher than this time last year.

May's figure was down from the peak £26.2bn in March, which was built on buy-to-let demand, but up on the £17.9bn in February.

The CML said it was the highest May figure since the £23.7bn in May 2008.

“Looking ahead, there is likely to be considerable uncertainty as a result of the EU referendum decision," said CML senior economist Mohammad Jamei.

"We expect this to affect sentiment and reduce activity below levels that would otherwise be expected in the near term, as both buyers and sellers adopt a wait-and-see attitude until the dust begins to settle. Market fundamentals underpinning house prices still look sound, and we do not expect significant house price falls, especially given the current supply demand imbalance.”

Economist Howard Archer of IHS Global Insight agreed.

"Housing market activity and prices now look to be at very serious risk of an extended, marked downturn following the UK’s decision to leave the UK," Archer said.

"This is likely to weigh down markedly on economic activity and consumer confidence, which is not good news for the housing market. Unemployment could also well rise over the coming months.

"House prices are also likely to be pressurized by more stretched house prices to earnings ratios and tighter checking of prospective mortgage borrowers by lenders."