CML: Mortgage lending falls to £20.5bn in September

Ryan Bembridge

October 20, 2016

row of houses housing

Gross mortgage lending reached £20.5bn in September – 7% lower than August’s £22.1bn total, Council of Mortgage Lenders figures show.

September’s lending total was still 2% higher than last year and the highest since 2007 when lending reached £29.9bn.

For the third quarter lending stood at £63.6bn, 11% higher than the second quarter.

Annual house price growth rises for first time in eight months

Some felt the figures were disappointing.

Henry Woodcock, principal mortgage consultant at IRESS, said: “I’m surprised the market has stumbled.

“There was a 7% rise in gross lending in August, but the month saw a drop in approvals which has followed through into September, effectively wiping out that gain.

“In spite of the fact that positive movements in the market all pointed to a continued recovery from the post-referendum and summer lull, borrower sentiment has not matched market expectations.

“However, I think this is just a blip.”

But Peter Williams, executive director of the Intermediary Mortgage Lenders Association, reckoned the figures show the market is ‘open for business’ after the Brexit vote.

He said: “September is often a month when house hunters renew their pursuits after pausing their over summer, but this year’s saw the highest September figure since before the global downturn.

“Any potential bumps in the road are unlikely to come from mortgage lenders as the availability of competitively priced deals remains high – both for purchasers and remortgagors – but issues on the supply side could inhibit activity.

“The consumer appetite is there, but the simple fact remains that there simply aren’t enough properties coming on to the market at the moment to satisfy this demand, so more thought needs to be given as to how to increase transactions – not least by revisiting stamp duty.”

Andrew McPhillips, chief economist at Yorkshire Building Society, said: “This monthly decrease was most likely a result of a reduction in house purchase activity caused by the lack of available properties.

“This, along with affordability constraints as house prices have continued to climb upwards, has limited the number of people who are able to afford to buy a property.

“Conversely, remortgage activity is likely to show strong growth in the coming months as borrowers seek to make the most of record-low interest rates to reduce their monthly repayments.

“In order to help more people to achieve their goal of owning a property, the UK must build more homes to bring supply in line with demand and reduce house price growth to make houses more affordable.

“The government should also consider introducing measures to help more people onto the property ladder in the short-term, such as by making stamp duty a seller’s tax instead of a buyer’s tax to reduce costs for first-time buyers and those moving up the property ladder.”

Matt Andrews, managing director of Bluestone Mortgages, reckoned the figures demonstrate that the market isn’t at full strength.

He said: “Despite this monthly dip, the year on year increase in lending highlights that the market is still buoyant, with lenders maintaining their appetites to lend.

“However, this does not necessarily mean that each lender is lending to everyone. There is still a growing number of borrowers, such as contractors, self-employed or those who have experienced a genuine life bump, being forced out of the market for not fitting typical lending criteria.

“What qualifies as a ‘standard’ borrower is evolving and the market needs to evolve with this to ensure legitimate customers are not locked out of homeownership.

“Only when lenders view this group of underserved people as individuals with their own financial histories and circumstances, instead of just numbers on a credit report, will our market truly return to full strength.”

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