CML: Q2 lending rises 17pc

Mortgage Introducer

July 16, 2015

In the second quarter £52.2bn was lent compared to £44.5bn in the first quarter.

Mohammad Jamei, CML economist, said: “Activity is picking up after a slow start to the year.

“Our lending figure for June may be flattered by the end of political uncertainties related to May’s general election, and the underlying picture is likely to be one of only modest recovery.

“This should be supported by favourable conditions in the economy, though it will be limited by rising house prices and affordability pressures.”

Lending in the second quarter only increased by 1% from last year’s quarter two figure of £51.7bn, suggesting the rise could be attributed to a normal seasonal adjustment.

June lending was particularly strong, as it increased by 29% month-on-month and 15% year-on-year to £20.5bn.

Ben Thompson, managing director of estateagent4me.co.uk, said: “Today’s increase in mortgage lending is likely to be the start of an uptick in lending for this year.

“As the wider economy improves and consumers start to feel more confident, activity in the market will continue to rise, which will push lending figures higher.

“The increase is likely to be led by buy-to-let lending, but we also anticipate increases in first time buyer and home mover lending over the next few months.”

Henry Woodcock, principal mortgage consultant at IRESS, added: “The uncertainty of the election is already very distant in the rear view mirror, as record low mortgage rates, strengthening consumer confidence and a strong labour market feed through into demand. All of this points towards a positive second half of the year.

“Yes, the likelihood of interest rates rising is increasing, but Mark Carney has reiterated that they are unlikely to hit anywhere like their historic norm, meaning mortgage rates are likely to remain attractive enough to stimulate borrower demand in the medium-term.”

And John Eastgate, sales and marketing director of OneSavings Bank, said: “Sentiment is improving, and the impact of General Election uncertainty is a thing of the past, with low rates acting as a key draw for borrowers.

“Although there have been indications that interest rate rises are closer, when these occur, they will be moderate and take some time to come through, and mortgage deals will remain attractive in the long term.

“Affordability remains a key issue, with house prices still increasing. Yes we have seen some recent intervention to stem demand, however it is supply that is the crux of the matter.

“While the Government has moved to speed the planning permission process, we are a long way from the level of housebuilding needed to match demand and contain house prices.

“The private rented sector’s role in the housing market will be ever more important, underpinning the long-term demand for buy to let mortgage finance.”

Richard Pike, Phoebus Software sales and marketing director, added: “As predicted activity in June was more brisk than in the previous few months, which seems to confirm that the much talked about uncertainty around the general election had a real impact. Going forward, with less uncertainty and a more stable political picture, I expect the market to continue to improve.

“Although the Governor of the Bank of England yesterday warned that interest rate rises are coming closer, most believe this will still not happen until 2016, and any rise is likely to be small which means we still have very competitive rates and products for the foreseeable. This should help the health of the whole of market, especially the remortgage sector which is still subdued.”

And Lucy Hodge, director, Vantage Finance, said: “The significant rise in gross mortgage lending in June certainly reflects what we’ve seen at Vantage, with a record month for new business, completions and enquires. The figures stand in contrast to the start of 2015 which many in the market observed as subdued – due in part to the General Election. With election jitters firmly behind the market, we anticipate June’s upward trend will continue during the second half of 2015.”

Stephen Wasserman, director of West One Loans, added: “Mortgage lending has made a sleepy start to 2015, but June’s CML figures show a market awakening from its slumber and going about its business. The nightmare caused by the pre-election uncertainty is well and truly over and home loan borrowers are able to act more decisively now the political pitch is set.

“There is concern among some specialist finance providers that their business levels will suffer now that high street lenders have regained their appetite, but just because mortgage activity levels have picked up, it doesn’t mean that banks are displaying the same enthusiasm to lend to businesses and developers. They have been ably supported by short-term finance over the last few years and won’t abandon this useful source of funding in a hurry.”

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