Gross lending hits £12.7bn in March, BoE
Think-tank warns the latest Bank of England mortgage data suggests it is “doubtful” that mortgage lending will have a “sustained recovery”.
Gross mortgage lending secured on properties was £12.7bn in March compared to the previous six-month average of £12.4bn, data from the Bank of England has revealed.
Its Lending to individuals data, published today (2 May), showed repayments in March were £11.6bn which is in line with the previous six-month average.
The number of loan approvals increased marginally in March to 49,860 but was lower than the previous six-month average of 53,103.
The number of approvals for remortgaging 29,511 also increased in March to 29,511 but was lower than the previous six-month average of 31,799.
Think-tank Capital Economics, warned that it was “doubtful” as to whether mortgage lending will now mount a sustained recovery.
Samuel Tombs, UK economist at Capital Economics, said: “Today’s UK money and lending figures suggest that the banking system remains a significant constraint on the pace of economic recovery.
“Granted, the number of mortgages approved for new house purchase rose from 49,000 to 49,900 in March.
“Nonetheless, this still leaves them lower than the levels seen in the second half of last year.”
He highlighted that although the Royal Institution of Chartered Surveyors recently reported that new buyer enquiries picked up in March, “credit conditions are continuing to tighten and news of the return to recession can only have dampened consumer confidence”
Mr Tombs said: “Meanwhile, both the money supply and bank lending posted sharp monthly falls of 0.8 per cent and 0.5 per cent respectively in March. This sent the annual growth of both to new record lows.
“Finally, the CIPS/Markit construction PMI fell from 56.7 to 55.8 in March, adding to signs that the economy started the second quarter on a weaker footing.”
David Marina, an independent mortgage broker at M&P Money Management, believes house purchases are likely to plateau at this level for the rest of 2012.
He highlighted that there has been a drop-off in activity since the stamp duty holiday ended and although demand from first time buyers has not fallen off a cliff but “it has slowed noticeably of late”.
Mr Marina said: “The lack of activity at the foot of the property ladder will, of course, ripple up. That’s the worry for the broader market.
“Looking forward, it’s going to be another indifferent year for the mortgage and property market.”