The Council of Mortgage Lenders revealed that lending reached 17.6billion in February 5 per cent lower than January’s 18.5billion but up 29 per cent on the 13.6billion recorded a year ago.According to economists, the likelihood of a imminent interest rate rise has faded, meaning property investors and owners have more time and less pressure to find better deals.Contrasting figures: Lending reached 17.6billion in February 5 per cent lower than January’s 18.5billion but almost 30% up on the February 2015 figure.
Today the Bank of Englands Monetary Policy Committee voted unanimously to keep rates unchanged at 0.5 per cent for March, marking seven years of record low interest rates.The BOE is now expected to leave interest rates alone this year as Governor Mark Carney and his colleagues wait for further signs that the UK economy has fully stabilised.
Howard Archer, chief UK and European economist at IHS Global Insight, said: With expectations of an interest rate hike any time soon recently fading markedly, there may be an easing back in the number of people feeling a need to re-mortgage in order to lock in low interest rates before they start to rise. Markits Household Finance Index shows that the number of respondents expecting an interest rate hike within a year edged back further to 45 per cent in March (the lowest since November 2013) from 46 per cent in February and 71 per cent in January. The number expecting an interest rate hike within 6 months dropped to 19 per cent in March from 22 per cent in February and 40 per cent in January. Despite the dip from January to February, gross lending was up substantially year-on-year, with the CML reporting the highest lending total for a February since 2008 when gross lending reached 24.1billion.
More detailed mortgage lending figures from the CML will follow the gross lending data, showing net lending and a breakdown of who is borrowing, from first-time buyers to buy-to-let landlords. Previous figures from January showed a 38.1 per cent annual leap in the number of loans remortgaged by buy-to-let investors. There was also a 19.1 per cent rise in remortgaging by homeowners during the month.But with the interest rate outlook changing markedly, this rush may be beginning to subsided.
Gross mortgage lending by month
2015
Feb 13.577bn
March 16.191bn
April 15.953bn
May 16.015bn
June 20.067bn
July 21.605bn
August 19.545bn
September 20.067bn
October 21.830bn
November 20.452bn
December 19.718bn
2016
January 18.470bn
February 17.600bn
The CML, whose bank and building societies members provide around 95 per cent of all residential mortgage lending in the UK, also warned it was unlikely that there will be any significant acceleration in lending in the coming months.CML economist, Mohammad Jamei, said: We think it unlikely that there will be any significant acceleration in lending.While there may be a slight current boost to lending as some transactions seek to complete before the 1 April tax changes in the buy-to-let-sector, this is likely to be followed by a slight fall in activity.
Affordability pressures continue to weigh on activity, as does the low number of properties coming on the market, though this has been improving very recently.
Lending figures have been bolstered as buy-to-let investors rush to beat a looming stamp duty hike which takes place this April.From April 1, people buying second homes, such as landlords investing in buy-to-let properties, will face a three per cent surcharge on stamp duty.Peter Rollings, chief executive of estate agent Marsh and Parsons, continued: Were on the final stretch now before the April 1 stamp duty changes come into force, and this has front-loaded buy-to-let lending into these early months of the year.But once the deadline passes it will quickly revert to business as usual, and a subsidence in buy-to-let borrowing will likely water down the growth in the mortgage market.Archer added: Housing market activity is seemingly getting some boost at the moment from Increased activity from buy-to-let and second home purchases ahead of Aprils rise in Stamp Duty.This could exert limited upward pressure on house prices in the near term.Back to normal soon: Peter Rollings, chief executive of estate agent Marsh and Parsons said we are on the final stretch before the irritating April 1 stamp duty changes come into force.
Property website Rightmove recently reported that house sellers asking prices across England and Wales jumped to a record high in February. The typical price tag on a property coming to market is now 299,287. The property listings website has also seen evidence that the supply of properties coming on the market is edging up in some areas. A lack of supply has been blamed for holding back sales.Mark Harris, chief executive of mortgage broker SPF Private Clients, said: Higher wages, a fall in unemployment, cheap mortgage deals and the likelihood that interest rates wont rise anytime soon, are boosting confidence and promoting growth.We expect this situation to continue in coming months. There are potential hiccups on the horizon which may foster some uncertainty, such as the EU referendum, but for many people life will go on and it will be business as usual.The challenger banks are keen to lend, while more established lenders also wish to bring in more business, which will be reflected in cheap rates and some tweaking of criteria. On the buy-to-let side, lenders will need to adapt to lending to limited companies as it looks as though an increasing number of investors will go down this route.
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