Mortgage lending up year-on-year, CML
Commentators warn the numbers belie underlying mortgage market fragility.
Gross mortgage lending was £10.2bn in April 2012, up £200m compared to the same month last year, data from the Council of Mortgage Lenders has revealed.
However, the CML reported that this figure represents a drop of 19 per cent compared to March 2012, when lending reached £12.6bn.
Bob Pannell, chief economist at the CML, said: “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.
“Eurozone developments are highly uncertain and have the potential to undermine UK economic prospects and conditions in our housing and mortgage markets. The underlying picture is likely to be one of easing momentum in the housing market, but with potential for a sharper downwards correction on bad eurozone news.”
Paul Hunt, managing director of Phoebus Software said: “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.”
David Brown, commercial director of LSL Property Services, said: “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.”