A dip in estimated gross lending figures for April is not the sign of a longer downturn in the mortgage market, an economist from the Council of Mortgage Lenders has said.
Data from the CML has shown a slight fall on March and on April 2014, but Mohammed Jamei said the figures do not necessarily prophesy a more protracted downturn.
The CML April estimate for total gross lending was £16bn, 1 per cent down on the previous month and 4 per cent less than the £16.7bn of lending done in April 2014.
The figures also showed a fall in lending from last year’s first-quarter total of £46.3bn to £44.5bn for the first quarter, 2015.
Mr Jamei said: “Although lending in April was fractionally down on the previous month and year, this followed a strong March. Overall we now seem to be on the cusp of a modest lending recovery.”
He said he could see signs that earnings growth was outstripping inflation combined with “mortgages being offered at extremely competitive rates” as being the driver for “stronger lending in future months”.
However, pre-election fears were a major cause of the dip in lending, according to John Eastgate, sales and marketing director at OneSavingBank.
He said: “With the new government now in situ, any lingering uncertainty has been put to bed, and sentiment has undergone a palpable bounce. There are already signs that mortgage activity is on the increase, with big-ticket purchases returning – and the market expects positive momentum to build as the year progresses.”
However, Patrick Bamford, director of mortgage insurance Europe for Genworth, was less positive about the prospects. He pointed to a decline in first-time buyer lending in the first quarter and other challenges to potential home buyers as being reasons to be less hopeful of a strong upturn.
Mr Bamford said: “Help-to-Buy remains a temporary solution to a permanent problem and is due to expire at the end of next year. There are signs that high loan-to-value lending is increasingly reliant on Help-to-Buy, which raises questions about how competition and access to 90-95 per cent LTV loans will fare when the scheme ends.
“The government must work with the mortgage and insurance industries to find a long-term solution and make this kind of scheme a permanent feature of the market.”
Mark Harris, chief executive of London-based mortgage broker SPF Private Clients, said that despite April’s dip, he was also hopeful. He said the market was playing “catch-up” following the pre-election hiatus and the prospect of lower interest rates for longer.
He said: “Buy-to-let lending remains strong, proving its enduring popularity. Investors like the tangible nature of property compared with stocks and shares, and the rising demand for rental property from those unable to buy means there is a ready supply of tenants.”