Mortgage lending to jump 10% in 2015

Gross mortgage lending for next year is set to increase by around 10 per cent in 2015, experts have predicted, as the market bounces back in the wake of the general election.

This year gross mortgage lending is set to be around £205bn, compared to £176bn in 2013, £145.3bn in 2012 and £141.3bn in 2011.

Speaking to FTAdviser, Nigel Stockton, Countrywide’s financial services director, said that mortgage lending should increase from circa £205bn in 2014 to £215-220bn in 2015.

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“Some of this will come from increased remortgage activity, as a bank base rate rise looks increasingly likely, but I also expect some transaction growth albeit at modest increases to 2014 and predominantly outside of London.”

He added that whilst overall gross mortgage lending will increase, he believes most of the action will be post-election.

Ray Boulger, senior technical manager at John Charcol, expect this year’s total to be about £207bn.

Mr Boulger predicted that some new lenders will enter the market or extend their proposition through brokers, helping to drive competition, although several lenders are also likely to increase mortgage lending next year.

“Therefore, my forecast is for gross lending in 2015 is £200-£225bn, with the increase split fairly evenly between purchase and remortgage.”

He also agrees that the election provides an “obvious excuse” to delay property purchases “but less so for a remortgage”.

Mr Boulger said: “If David Cameron emerges as prime minister, the resulting EU referendum two years later would provide a further excuse to do nothing. However, as pent up demand increases, many won’t want to defer action for two years until after a possible referendum.”

He added that both estate agents and house builders are reporting a more challenging market and house price increases are slowing down which all make it difficult to see the number of housing transactions increase much from this year’s 1.25m. This is a 17 per cent increase on the 2013 figure.

“Therefore any increase in mortgage lending will primarily come from higher purchase prices and/or loan-to-values or an increase in remortgaging. Remortgage approvals are flat in the first nine months of this year, but that disguises an increase in Q1 and falls subsequently... largely down to the MMR.”

Dale Jannels, managing director at All Types of Mortgages, argued that seasonal trends are out of the window and most lenders have advised that they have a big increase in targets for 2015.

He agrees with Mr Boulger that gross mortgage lending will be around £225bn next year and, as a result, “we will see lenders continuing to compete aggressively for volume”.

Mr Jannels said: “This can only be a good thing for the end consumer.”

Additional reporting by Donia O’Loughlin