Data from the Council of Mortgage Lenders has revealed that gross mortgage lending at the end of last year held steady on both an annual and monthly basis, further evidencing claims the market is cooling as a new regulatory regime takes effect and ahead of the general election.
Gross mortgage lending reached £16.5bn in December, CML estimates, unchanged from November and 1 per cent down on December 2013. Overall, for 2014 the gross lending estimate is £205.6bn, up 17 per cent on 2013’s lending figure.
Bob Pannell, CML chief economist, said: “Housing market activity has been cooling and house price growth slowing in recent months, but 2014 was still the strongest year for mortgage lending since 2008.
“First-time buyers were a key driver, helped by government initiatives such as help-to-buy. As a result, the number of first-time buyers topped the 300,000 mark. While a far cry from the half million that we might regard as ‘normal’, this was the highest number... since 2007.
“Although lending remained muted in December, the previous monthly pace of decline in approvals appeared to moderate. So, alongside the big picture of a softer market, we are beginning to detect signs that underlying market conditions may be stabilising.”
However, Henry Woodcock, principal mortgage consultant at financial services software firm Iress, said that activity in December was merely subject to the “usual seasonal lull” and that it would “bounce back this year.
He said: “While we may not see the same red hot start to the year as we did in 2014, there are plenty of reasons to expect activity to bounce back.
“The prospect of an interest rate rise is looking all the more distant, while intensifying mortgage rate competition should stimulate buyer demand.
“Equally, we should start to see the impact of the stamp duty reforms filter through into activity as the year progresses.
“It remains to be seen what impact the EU Mortgage Credit Directive and the uncertainty of the General Election will have on the market, but the outlook remains broadly positive.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said that while his firm expects the housing market to be more subdued over the next few months, the broking firm is still predicting increased lending in the region of £215bn for the year.
“While first-time buyers have been a key driver of the market last year, we expect the remortgaging market to be strong over the next 12 months with borrowers not so much fearing a rate rise but enticed by some of the astonishingly cheap deals now available.”
donia.o’loughlin@ft.com
