MortgagesNov 19 2015

CML warns of affordability pressure

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CML warns of affordability pressure

Gross mortgage lending reached £21.8bn in October, 8 per cent higher than September’s lending total of £20.1bn, according to Council of Mortgage Lenders’ estimates.

In addition to the month-on-month rise, lending rose 19 per cent year-on-year, from £18.4bn last October; the highest monthly figure since gross lending reached £23.6bn in July 2008.

Bob Pannell, CML’s chief economist, said the trend looks set to continue over the closing months of the year, with the factors helping support this recovery continuing to be low inflation, strong wage growth, an improving labour market and competitive mortgage deals.

“As a result, lending this year is likely to exceed our forecast of £209bn, though affordability pressures will limit business volumes for first-time buyers and movers meaning that we think the market has only modest further upside potential over the short-term.”

Jonathan Harris, director of mortgage broker Anderson Harris, confirmed advisers are certainly busy, as borrowers increasingly turn to an intermediary to help navigate the post-Mortgage Market Review world.

He said: “The biggest challenge for borrowers is meeting lenders’ affordability criteria, as property prices continue to rise in many areas while wages fail to keep pace.”

Jeremy Duncombe, director of Legal and General’s Mortgage Club, welcomed the fact the proportion of lending distributed through intermediaries is steadily increasing and now accounts for 70 per cent of overall lending.

“This is good news for consumers as it means that more people are benefitting from full advice, which is helping borrowers to secure mortgage products at more competitive rates that are better suited to their needs.”