Has Mortgage Lending Increased or Decreased?

In the past week we have seen one set of headlines saying that mortgage lending has decreased and other reports have said that there has been an increase (however slight). So what the hell is going on?

To make matters worse neither of the two statements are incorrect, but you have to have an understanding of where these conflicting pictures come from.

So on the 30th June 2009 we were told that mortgage lending had decreased for the 5th month in a row. Now, the source of this report is the Building Societies Association. It explains that its members (virtually every Building Society) have seen an overall decrease in mortgage lending.

Yet on the 1st July 2009 there were reports that there had been a marginal increase in the number of approved mortgages. This report came from the Bank of England and gives details of all the mortgage lenders in the UK.

The Bank of England Report is the one to go with, they are looking at the entire market and giving the most accurate picture. The Building Societies Association is reporting on its members' performance in the last month and there are a number of reasons why their mortgage lending is down:

1. There are fewer Building Societies aggressively pursuing mortgage business through the best buys.
2. Banks are now more actively seeking new mortgage business and they are offering better rates than building societies at present
3. Building Societies are finding funding mortgages through savers at present is tough as there is more competition for deposits

It is important not to take headlines at face value in these strange financial times, as a little knowledge can be dangerous