The Council of Mortgage Lenders released the gross mortgage lending figures for April today. Lending fell by 19% from March, as an estimated £10.2 billion was lent. This is a monthly fall of £2.4 billion. However, this still represents an annual increase of 2%.
Bob Pannell, CML Chief Economist comments:
"Mortgage lending activity has been relatively buoyant in recent months, with stronger lending for house purchase underpinning the more upbeat lending picture.
"The underlying picture is likely to be a bit stronger than the April figure suggests, because some first-time buyers are likely to have brought forward their transactions to March to take advantage of the stamp duty concession that was coming to an end.”
David Brown, commercial director of LSL Property Services, comments:
“After the false peak in lending caused by the end of the stamp duty exemption in March, April’s figures show that the mortgage market is experiencing an exaggerated trough after thousands of first-time buyers brought forwards planned purchases. While the annual figures reflect how far the mortgage market has come in the last 12 months, they should not mask the underlying weaknesses in the present market, which are undermining the short-term prospects for growth in mortgage lending. Lenders face increasing funding costs as a knock-on effect of the Eurozone crisis. On top of this, concerns over the recessive economy and the potential for a weakening labour market are eroding their confidence in higher LTV lending to first-time buyers. As a direct result, tenants looking to buy are likely to face even longer in the private rented sector while they save for substantial deposits — in addition to stamp duty — pushing up demand for rental accommodation and driving rent increases.”
Paul Hunt, managing director of Phoebus Software said: “Despite entering recession in the UK and with the eurozone circling the plughole, lenders have still managed to increase their activity since this time last year. Even more impressive is that this has been achieved in a month where fiscal policy has created a hefty headwind in the form of stamp duty. These figures emphatically demonstrate the utter hubris of the government in suggesting the stamp duty holiday did nothing to boost the first-time buyer market. Last month it launched lending violently upwards and now we’ve seen the corresponding fall. The industry must hope now that first-timers will be able to jump this additional fiscal barrier and keep coming to market. While that’s by no means certain, lenders’ consistently positive attitude to making finance available wherever responsibly possible provides a strong cause for optimism”.
The figures showing growth in gross mortgage lending suggest that despite the economic turmoil there is still some optimism over the housing market. It remains to see whether this will remain in the next few months
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