The housing market can expect an upturn in lending over the coming months, the Council of Mortgage Lenders has suggested, as the latest monthly lending figures showed activity beginning to recover.
CML economist Mohammad Jamei said forward indicators of lending, such as Bank of England data on approvals, show a modest recovery is on the horizon.
He said: “The continuing improvement in the economy and household finances should support activity through the rest of this year. However, the extent to which we see an increase in activity may be somewhat limited, given affordability constraints.”
The trade body’s latest market commentary revealed that gross mortgage lending in May saw little change on the previous month. There was an increase of 2 per cent to an estimated total of £16.2bn May, compared to the previous month. However, this was still 3 per cent lower than the £16.8bn of lending undertaken in May 2014.
Adjusting for seasonal factors, the final figure in May 2015 was likely to be above £17bn. Mr Jamei said:“This would make it the third month in a row lending has been above this threshold, for the first time since the start of 2014.”
Loans for house purchases were stable in April, compared to March, though there was a slight dip in the number of loans for remortgages, CML’s data showed.
Approvals for house purchases in April showed a 10 per cent increase compared to March, the largest monthly rise since early 2009. Remortgage approvals also increased by 10 per cent, which could be the result of households taking advantage of the competitive mortgage rates available.
John Eastgate, OneSavings Bank’s sales and marketing director, said: “You might say that mortgage market activity is back with a vengeance, but if you look beyond the minimal effects of uncertainty surrounding the election it never went away.
“Borrowers and new buyers continue to exhibit strong demand for mortgage finance.”
Jonathan Harris, director of London and Surrey-based mortgage broker Anderson Harris, said: “With the uncertainty caused by the election out of the way, gross mortgage lending has edged up month-on-month. Lenders are doing their bit; they are keen to lend and offering rock-bottom mortgage rates to entice borrowers. These low rates are likely to continue and once the traditional summer lull is over, we could see a pick-up in activity.”