UK mortgage activity has reached a plateau, latest data suggests
Tue 30 Sep 2014
Lending for homes in the UK has reached a plateau with concerns about interest rate rises affecting activity, according to the latest figures.
The Council of Mortgage Lenders estimates that gross mortgage lending reached 17.8 billion in September, some 1% lower than August but 10% higher than September last year when it was 16.2 billion.
Gross mortgage lending for the third quarter of this year was therefore an estimated 55.5 billion, an 8% increase from the second quarter of this year, and a 13% increase on the third quarter of 2013 when it was 49.2 billion.
Uncertainty over when we will see the first increase in UK base rates is exacerbated by weaker growth prospects in several major economies, including the Eurozone, said CML chief economist Bob Pannell.
Recent indicators and policy actions corroborate our view of a gentle easing in market conditions. There is growing evidence that mortgage lending activity, and the housing market, are sitting on a plateau, he added.
Meanwhile, the latest figures from the Bank of England show that mortgage approvals by all UK resident mortgage lenders for house purchase picked up in June, before easing back slightly in August.
The average monthly net lending flow by UK resident mortgage lenders was 2.3 billion in the three months to August, broadly unchanged compared to the previous three months. The data also shows that total gross secured lending in the three months to August increased compared to the previous period.
The Bank report says that in recent discussions, most of the major UK lenders reported that operational issues associated with the implementation of the Mortgage Market Review had pushed down on approvals over the summer, but had now largely dissipated. It amounts to a natural ebb and flow, according to Peter Rollings, chief executive officer of Marsh & Parsons. After a strong surge at the start of the year, house price growth is easing to more natural levels, and as a result, overall mortgage lending dipped in the month to September. But the stream of lending has not dried up, and the mortgage market has negotiated the new criteria of the Mortgage Market Review around the introduction of tighter affordability checks and more rigorous regulation in the spring, he said.
Confidence is still buoyant, kept afloat by the growing pool of available properties on the market and some outstanding mortgage products coming to the market since the indication from the Bank of England that interest rates would stay lower for longer, he explained.
Trading conditions are considerably less turbulent than they were a few months ago, and buyers and sellers alike are enjoying the less frenetic pace, increased choice and the calmer pace of competition, and this is already leading to a more active fourth quarter of the year. The only obstacles that could disrupt the course of the recovery are additional interventions in the mortgage market or premature withdrawal of schemes like Help to Buy, which could sink first-time buyer aspirations and stall progress further up the chain, he added.
Paul Smith, chief executive officer of haart, said the firms agents are still seeing huge demand from buyers with 10 chasing every property across the UK. First time buyers in London are being even more resourceful to get on the ladder with many seeking out cheaper property on the fringes of the capital with good transport links such as East Ham and Dagenham where you can still buy a three-bedroom property for under 250,000, he added.
According to David Newnes, director of Your Move and Reeds Rains estate agents, the housing market still has momentum. Some regions are more exposed to the elements than others and many homeowners are still waiting for property prices to be rebuilt to pre-crisis levels, he said.