While lending may have dipped since December the overall trend of rapid growth shows no signs of slowing as the year gets off to a bang with the highest level of gross lending in January for eight years.
Total lending in January, according to the Council of Mortgage Lenders, stands at £17.9 billion. While 9% lower than December 2015’s £19.8 billion it sits comfortably ahead of January 2015 by 21%, with the last January to feature more lending being January 2008, which saw £25.2 billion.
CML economist Mohammad Jamei said: “Lending started the year on a positive note. Our monthly estimate is 21% higher than a year ago, with the current growth rate in lending similar to the closing months of 2015.
“UK market fundamentals are helping to underpin this recovery, with real wage growth, an improving labour market, competitive mortgage deals, and government schemes all supporting household demand. We still only see limited upside potential going forwards, as the number of properties for sale on the market remains low and affordability pressures weigh on activity. Upcoming tax changes in the buy-to-let sector are adding an element of uncertainty to the market.”
Richard Sexton director of e.surv chartered surveyors said: “Now is a promising time for borrowers, with mortgage loan options increasing and an ongoing commitment from lenders to help aspiring homeowners.
“Short term, Buy-to-let lending has taken centre stage. Over the next couple of months, all eyes will be on the sector and the impact of the stamp duty changes. But lending to first-time buyers should also be stealing some of the limelight. It’s been a bright January for new homeowners with small-deposit loans totalling 12,388 in January – up almost a third year-on-year, so all buyers are benefitting from a benign lending environment.
“Driving buyer activity are real economic changes – higher employment, higher wages and perhaps most crucially stronger government support. Whilst the various Help to Buy schemes may not be able to claim all the glory, they are a clear sign of ongoing support for the market from the government.
“The question is, can these lending levels last? After the surge ahead of the stamp duty deadline, underlying problems such as limited supply and spiralling house prices could be barriers to prospective homeowners once again. In particular, while lending is buoyant, the number of new property listings remains relatively low. Both buyers and sellers must remain committed to the market to avoid stagnation.”
