CML figures indicate pre-Brexit dampening of market

Gross mortgage lending figures for May indicate a market holding back, according to the Council for Mortgage Lenders.

According to the CML there was £18.2 billion worth of lending, up £600,000 on April and 14% on May 2015. Despite uncertainty over the referendum, the CML believe there is no reason for prices to fall.

CML senior economist Mohammad Jamei said: “As expected, lending continued to be somewhat dampened in May, reflecting the earlier rush in the first quarter to beat the stamp duty change on second properties.

“Looking ahead, there is likely to be considerable uncertainty as a result of the EU referendum decision. We expect this to affect sentiment and reduce activity below levels that would otherwise be expected in the near term, as both buyers and sellers adopt a wait-and-see attitude until the dust begins to settle. Market fundamentals underpinning house prices still look sound, and we do not expect significant house price falls, especially given the current supply demand imbalance.

“The decision to leave the European Union will materially impact prospects for the UK housing market. One of the first elements of the market likely to be affected is property transactions, as most transactions are discretionary so some buyers and sellers will wait to get a clearer idea of where we might be headed. This would in turn dampen house price growth.

“Given that the UK housing market continues to be somewhat distorted by the after effects of the stamp duty change on second properties (discussed at more length here) and the build-up of uncertainty in relation to the EU referendum over the last few months, the downside to transactions may not be dramatic, but it may well be protracted.”

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