The Council of Mortgage Lenders has once again suggested mortgage lending activity may have plateaued following the implementation of the Mortgage Market Review, despite its estimates that the gross mortgage lending for August marks the highest lending total for the month since 2008.
Gross mortgage lending reached £18.6bn in August, 5 per cent lower than July but 13 per cent higher than August last year, the CML estimates.
Bob Pannell, CML’s chief economist, observed that the narrative of recovering house purchase and buy-to-let activity continued through August, but cautioned that this was “flattered by strong seasonal factors through the summer period.”
He continued: “A gentle slowing of lending activity may now be in prospect, as a result of the continuing impact of tighter lending rules and a softening of the London market.”
The council’s monthly commentary noted that the Bank of England’s reported gross mortgage lending of £19.7bn in July was the strongest monthly issuance in six years and marked similarly positive performances for first-time buyers, movers and buy-to-let activity.
Remortgaging activity represents a notable exception to an otherwise fairly strong picture, according to the CML.
“Remortgage activity looks set to remain fairly subdued, until such time as the fear of imminent rate increases shifts the financial incentives to switch,” it said.
CML said its figures indicated that “lending activity has reached something of a plateau”, an assertion which ties in with the latest report of the Bank of England’s agents, noting that housing market activity had stabilised at lower transaction levels than at the start of the year.
Several indicators, such as BoE house purchase approvals data, suggest borrower appetite may be starting to wane.
“Some of this may reflect the implementation of the Mortgage Market Review,” the CML added.
The council stated it does not expect any short-term impact arising from the decision of HM Treasury to consult on the proposed regulation of the consumer-oriented portion of buy-to-let lending, as this would only apply from early 2016 onwards.
“Meanwhile, the Financial Policy Committee has its first annual opportunity to review Help to Buy metrics when it meets later this month.”
Richard Sexton, director of e.surv chartered surveyors, commented that while the mortgage market may have paused for breath in August, the recovery is still in full swing.
“Lending to higher loan-to-value borrowers is at its highest proportion in six years – and banks are much more willing to support high LTV borrowers than a year ago.
“At the same time, regulation is ensuring that there is a strong filtering process for applications, and only borrowers who will be able to afford repayments are offered high LTV loans. The market is more accessible than ever, but is also more sustainable than ever.”
