Annual mortgage lending steady at £16.9bn: CML

Gross mortgage lending reached £16.9bn in November, matching the same amount recorded a year ago, according to the data from the Council of Mortgage Lenders.

The figure is down 9 per cent on October’s £18.6bn figure. House purchase approvals have now fallen for four months in a row, with property transactions are back down to their levels of about a year ago.

Coupled with a continuing fall in the annual growth rate of most house price indices, the CML stated that the market appears to be settled.

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While earlier in the week the trade body made a market forecast for moderation in the housing market over 2015 and 2016, it said reforms in stamp duty may modestly boost activity in the short-term.

Mohammad Jamei, the CML’s economist, added that the reform’s impact will fade away in the medium term. Over time the measure may push up house prices at the lower end of the market as it gives buyers slightly more flexibility and lower upfront costs.

The Office for Budget Responsibility estimates that the new system will cost about £800m per year for the government.

While the CML predicts a steady state for transactions around 1.2m over the next two years, the OBR forecasts a return to longer term averages of around 1.4m.

This forecast also underpins the OBR’s strong growth in revenues from stamp duty over the forecast horizon and was deemed “rather optimistic” by the council.

“Our view is that given the ongoing affordability pressures facing buyers, it is unlikely for the market to return to these levels,” it added.

Jonathan Harris, director of mortgage broker Anderson Harris, flagged up that the steady year-on-year picture makes for a “sustainable and healthy market” which is far better than January’s 40 per cent year-on-year jump.

‘The CML expects this picture to continue into next year with a steady increase in lending but nothing too dramatic. The stamp duty reforms are likely to provide a boost in the short term to the lower end of the market but the mortgage market review reforms have made it harder for many people to get a mortgage.

“With the Bank of England suggesting that the first interest rate rise won’t be until the end of next year, at the earliest, this will boost activity in the mortgage market.

“All we need now is for lenders to come up with innovative products that will solve some of the issues created by MMR. In particular, something directed at older borrowers who are struggling to get a mortgage, remortgage or even guarantee a child’s mortgage because of their age.”