CML: Mortgage lending strongest since 2008

Nia Williams

November 20, 2013

This is the highest monthly estimate for gross lending since October 2008 (£18.6bn).

Commenting on market conditions, CML chief economist Bob Pannell observed: “Housing activity is set to strengthen further in the short-term and to contribute materially to overall economic growth.

“Combined with the Bank of England’s recent optimism about the economy, this has led some commentators to speculate that an early rate rise may be on the cards. We do not currently share this view, which we believe underplays the importance that the MPC attaches to a secure recovery before raising rates.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “We are coming to expect inexorable rises in mortgage lending and October’s figures don’t disappoint. The lending numbers have bumped around the £16bn mark for the latter part of this year, but this is the first time they have broken through the £17bn barrier.

“But let’s not get carried away: while this is the highest monthly estimate for gross lending since October 2008 at £18.6bn, it is still 5% off that figure, so the recovery is still very much underway.”

Stephen Smith, director, housing & external affairs at Legal & General Network, said: “It’s not surprising to see mortgage lending figures continue to rise.

“Although the increased supply of mortgage finance and the pace of price rises in certain areas will make some people nervous it’s important to remember how flat the market has been overall since the credit crunch. The fact that Yorkshire Building Society has today unveiled a series of 95% mortgage products indicates that lender confidence is returning and this is borne out by today’s CML’s figures being higher than expected.

“While we must be careful not to repeat mistakes made in the past the fact remains there are many responsible and capable borrowers currently being priced out of home ownership by the requirement for sky high deposits and making mortgage finance available to these responsible individuals is no bad thing.

“The major problem is not increasing the supply of mortgage lending but rather the chronic undersupply of suitable housing across the UK. It’s vital that more homes are built to meet the undoubted demand. This is more likely to upset the equilibrium of the housing market rather than lending at 95% LTV to financially responsible borrowers.”

Richard Sexton, director of e.surv chartered surveyors, agreed: “Although house prices and lending are pumping up in the run-up to Christmas, there’s no Boxing Day sale for houses. With more buyers entering the market, homes come with a growing price tag, which could potentially push more first-time buyers from the market in the New Year, despite the aims of Help to Buy.

“To ensure new buyers aren’t priced out we must satisfy the demand by building more homes.”

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