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UK Mortgage Lending Rises, Price Falls Bottoming Out

Mortgage lending rose 17 percent to an estimated 12.3 billion pounds ($20.2 billion) in June from May but still suffered a decline from the same period last year, new data from the Council of Mortgage Lenders (CML) showed Monday.

Gross mortgage lending slumped 48 percent from June 2008. It remained flat in the second quarter of this year from the first quarter, at 33.3 billion pounds, the data showed.

"The pick-up in June’s lending largely reflects seasonal factors, and these may well support lending volumes at moderately higher levels over the rest of the summer," CML economist Paul Samter said in a statement.

But restricted funding for mortgage lending, a reduced number of active lenders, rising unemployment and limited consumer demand were likely to hold back significant improvement, Samter added.

The CML maintained its forecast that mortgage lending will reach £145 billion this year.

Prices Bottoming Out

Meanwhile, asking prices for homes in England and Wales in July are an average of 3.1 percent lower than a year ago, with growing signs the past year's price falls have bottomed out, property website Rightmove said, according to Reuters.

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Sharon Lorimer

The non-seasonally adjusted average asking price for a home rose 0.6 percent in July to 227,864 pounds ($371,500) after a 0.4 percent fall in June, meaning prices have risen for five months out of seven so far this year, Rightmove said.

"Key indicators increasingly suggest that prices have bottomed out. We have seen a modest recovery in mortgage approvals, and an improvement but not an oversupply of new sellers coming to market," the website said.

"However, with no real signs of increased mortgage funding or a relaxation of high deposit requirements, the `steady state' is the most likely scenario for the remainder of 2009."

London was the only region to show a year-on-year rise in average asking prices, with a 0.6 percent increase to 402,761 pounds, after prices rose 1.4 percent in July due to a shortage of properties for sale.

Rightmove says more than 90 percent of property for sale in England and Wales is advertised on its website. Actual house price falls have been steeper than the declines in asking prices recorded by Rightmove.

The Department for Communities and Local Government recorded a 12.5 percent annual drop in sale prices in May, compared to a 6.2 percent drop in asking prices in Rightmove's survey for that month.

Britain's economic slowdown has eased markedly since the turn of the year, relieving pressure on house prices, but limited mortgage availability, rising unemployment and repossessions have kept sales volumes very low.

— Reuters contributed to this story