Gross mortgage lending down in February but signs of stabilisation shine through
Thu 19 Mar 2015
Gross mortgage lending in February 2015 fell to the lowest monthly level recorded since April 2013 but there are signs of stabilisation, the Council of Mortgage Lenders (CML) says.
February lending remained subdued at 13.4 billion, which is a decline of 9 per cent on both the month and the year. Gross mortgage lending in January 2015 as well as February 2014 stood at 14.8 billion.
Although the market is continuing to slow down for the moment what among others is due to seasonal effects, experts see indications for a stabilisation and are expecting improvement later in the year.
"Earlier soft approvals data meant that weaker February lending has not come as a surprise. Seasonal factors tend to weigh on activity at the start of the year, but looking through these, the underlying picture appears to be stabilising. We expect lending to improve in the coming months, as employment and earnings continue to pick up and the impact of recent stamp duty reforms start to feed through," CML chief economist Bob Pannell said.
"The purchase mortgage market is now working with newly introduced legislation to produce growth at a safe and sustainable pace. Its the story of the tortoise and the hare the reconfigured market has a wealth of checks and balances to ensure that growth occurs in a measured fashion rather than a dizzy burst. Growth is slower than a year ago, but it is more sustainable, Richard Sexton, director of e.surv chartered surveyors, commented.
Lending is only just getting into its stride at the beginning of the year, and its also a much longer process from start to finish now, so well see more approvals race through as the market heats up later in the spring. But buyer finances emerge much healthier for going through a more rigorous obstacle course, and market confidence is in fine fettle.
First-time buyers had great cause for celebration yesterday, as another government measure offers thousands of aspiring homeowners a timesaver to accelerate saving for a deposit. With Help to Buy ISAs, whittled down stamp duty, generous mortgage rates, and plenty of supply on the market, all the elements are at work to up the ante in the housing market in the coming months, Peter Rollings, chief executive of Marsh & Parsons, said.
Despite that the Help to Buy ISA scheme is good news for first-time buyers it will not solve the problem with insufficient housebuilding. Calls from within the industry were heard after yesterday's budget speech, asking that the government does more to boost construction of new homes, especially in areas hit by severe supply shortages like the capital.
Richard Pike, sales and marketing director at Phoebus Software, also calls for a solution to the scarce supply on the market. Commenting on the CML figures, he said:
" The gross lending figures from the CML today show a continuing slow down in the market. However, as we also know from their figures for January released earlier in the week there were some positives with more remortgages and first time buyers making it on to the property ladder.
Housing supply continues to be a problem, with many areas struggling to keep up with demand and this may be part of the problem. It will be interesting to see if the Conservatives remain in power whether their housing zone plans and other house building incentives boost home building enough to alleviate at least some of the housing supply dilemma.
Andy Knee, chief executive of outsourced property services provider LMS, comments on the supply issue as well: "Gross mortgage lending trails behind last month and is indicative of the struggle that many hopeful buyers still face in purchasing a home be they existing home owners or new buyers. The Chancellors announcement yesterday of a Help to Buy ISA provides some much needed support for first-time buyers, but fails to address the problem at the crux of the issue: a lack of supply."