Gross mortgage lending up in July

Robyn Hall

August 20, 2014

CML market and data analyst Caroline Offord said: “Mortgage activity seems to have remained robust following the regulatory changes but the eventual impact of these remains uncertain.

“Property transactions in the first half of the year showed a 25% increase compared to the same period a year ago but, as set out in our recent market forecast update, we expect that intensifying affordability pressures could start to dampen this upwards trend.

“Economic conditions have strengthened but while the Bank of England has signalled an improved economic outlook since May, headwinds remain and the message about future rate rises being measured and gradual remains unchanged.”

Alan Cleary, managing director of Precise Mortgages, said: “Over the past few weeks we’ve seen further speculation that the Mortgage Market Review is gently applying the brakes and cooling the housing market. However, figures released today from the CML tell a wholly different story. With gross mortgage lending reaching the highest in six years, it’s clear the market isn’t ready to slow down just yet.

“It’s encouraging to see that negative speculation isn’t yet discouraging buyers, especially those all-important first time buyers looking to access the market. Schemes like Help to Buy have certainly proved beneficial to encouraging lending, and not just to younger buyers, but the whole market.

“Only time will tell as to the longer term impact of MMR, although today’s figures are promising, we could well see a dip in the near future.”

Jeremy Duncombe, director, Legal & General Mortgage Club, added: “The increased housing market activity since January has led lenders to raise projections of what they will lend this year. For the first time since 2008, the Council of Mortgage Lenders expects that more than £200bn will be lent by the end of this year. Certainly from our recent conversations with lenders, they are confident they have the capacity and also the appetite to meet this extra demand.

“With confidence returning to the economy, we expect a new normal level for lending to be around £240bn to £250bn per year, with much of this coming from the intermediary channel as lenders’ distribution models evolve.”

And Henry Woodcock, principle mortgage consultant, IRESS, said: “It’s clear that the market may have found its footing and is striding forwards following the introduction of the MMR. However, there are real question marks over whether this growth can be sustained for the remainder of the year. A combination of rising house prices, fears of an interest rate hike and tougher lending conditions is denting confidence among new buyers, and we expect this to accentuate the seasonal summer slowdown. With London in particular showing signs of slowing growth, we may see the frantic pace in the housing market decelerating – a trend that will continue if rates are hiked earlier than forecast.

“However, that’s not to say activity is about to plummet. First-time buyer enthusiasm, aided by Help to Buy, remains strong among those able to access finance, while the buy to let sector will continue to underpin lending in the long-term as the UK’s need for accommodation continues to climb.”

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