CML: Post-election lending inches up by 2pc
Gross lending reached £16.2bn in May, which was 2% higher than in April but 3% lower than the £16.8bn lent in May last year.
The Conservatives won a majority in partliament on May 7, a result which satisfied many who feared Labour policies including the party’s Mansion Tax proposal.
Richard Sexton, director of e.surv chartered surveyors, said: “Any remaining caution left from the run up to the election is dissipating, and lenders are optimistic that the summer will see the market stretch its legs and get into its stride.”
He added: “The mortgage market has shown stability against all the odds.
“Last April saw the new MMR regulations come into play, whilst this April, we were anticipating the most uncertain election in a century.
“Against these headwinds, the lending recovery has been remarkably resilient. That stability is encouraging – signalling a potential sustainable long-term trend, rather than the volatile days of recent years.”
In the first quarter of 2015 the market slowed slightly as gross lending stood at £44.5bn, lower than the £51bn recorded in the fourth quarter of 2014.
Henry Woodcock, principal mortgage consultant at IRESS, said: “Following a stagnant lending period steeped in political and economic uncertainty, the mortgage market is now starting to respond.
“The outcome of the general election has given the market the much needed confidence boost to encourage lending once again, ending uncertainty, leading to higher lending volumes than we have seen in recent months.
“Demand for buy-to-let finance, especially remortgages will continue to underpin the market. Added to that, low interest rates and the ongoing mortgage price wars will encourage demand.
“We do not view this increase as a short-term phenomenon – with interest rates unlikely to be hiked, and consumer finances improving, growth should continue into the second half of 2015.”
Jonathan Harris, director of mortgage broker Anderson Harris, said: “Lenders are doing their bit; they are keen to lend and offering rock-bottom mortgage rates to entice borrowers.
“These low rates are likely to continue into the autumn and once the traditional summer lull is out of the way, we could see a real pick-up in activity.”
He added: “The main problem is lack of housing stock, which will continue to support prices. The gap between what people earn and what they can afford to buy continues to be an issue.
“There is little incentive to sell when there is a lack of choice as to what to buy, while tougher affordability criteria as a result of the mortgage market review may also make it harder for borrowers to get the mortgage they need.”