Gross mortgage lending reached £18.5bn in April, almost a third lower than March’s total of £26.2bn, but significantly higher than for the same time a year ago, according to the Council of Mortgage Lenders’ estimates.
The figure for April is 16 per cent higher than the £16bn lent for that month in 2015,
It also represents the highest lending total for an April since 2008’s total of £25.3bn.
CML economist Mohammad Jamei said as the market moves past the stamp duty change at the start of April, a quieter second quarter is expected, as some transactions that were due to take place were brought forward to the first quarter of this year.
“This is likely to mean that over the next few months buy-to-let takes a back seat as lending is driven by first-time buyers, movers and remortgage customers.
“The underlying picture still shows signs of growth, as the market remains underpinned by strong fundamentals such as increasing wages and rising employment,” he continued, adding it is possible the uncertainty around the upcoming EU referendum in June will weigh on activity.
John Eastgate, OneSavings Bank’s sales and marketing director, said the extremes of March make it futile to try to extract any meaningful insight from April’s numbers.
“More importantly, market feedback suggests that normality has returned at enquiry level, although it will be the third quarter before we see this in new lending,” he commented.
Whether lending rises in May will depend on macro events such as the impact of the Brexit vote, Henry Woodcock, principal mortgage consultant at IRESS, said.
“Lenders may increase the number of long-term deals of up to 40 years to tempt borrowers struggling to afford shorter terms, but on the flip side, as the Bank of England interest rate remains static, lenders may increase interest rate margins.
“The lowest rate tracker deals have already risen by 0.24 per cent in the last six months. The unknown effect of the EU vote in June may further depress lending in May as borrowers wait and see both the result and the impact on lenders and house prices.”
SPF Private Clients chief executive Mark Harris said he does not expect to see a significant slowdown in activity on the residential side.
“There are still excellent mortgage rates available, both fixed and variable. Interest rates are unlikely to rise anytime soon which will continue to attract first-time buyers and second steppers to the market.
“The raft of high loan-to-value deals on the market will make life easier for first-time buyers, and with Barclays removing the deposit requirement on its Family Springboard mortgage recently, lenders seem prepared to be increasingly flexible.”
peter.walker@ft.com
