Latest reports from the Council of Mortgage Lenders has indicated that gross mortgage lending during May remained stable, both month-on-month and year-on-year.
Despite rising by 2% on April to total £16.2m, total lending was 3% down on the £16.8m recorded a year ago. However, forecasts from the Bank of England suggest that the market will improve over coming months, backing up the CML’s belief that a recovery is starting to take shape.
CML economist Mohammed Jamei feels that, ‘economic environment is one that should support increased activity in the near term, coupled with low mortgage rates. But while we expect these factors to support activity, there is a limited upside, driven mainly by affordability constraints.’
Richard Sexton, director of e.surv chartered surveyors, noted, ‘the mortgage market has shown stability against all the odds. Last April saw the new MMR regulations come into play, whilst this April, we were anticipating the most uncertain election in a century. Against these headwinds, the lending recovery has been remarkably resilient.’ Sexton described the stability as, ‘encouraging,’ as he feels it signals a, ‘potentially sustainable long-term trend, rather than the volatile days of recent years.’
Gross mortgage lending remains steady in May
The proportion of lending to borrowers with smaller deposits is holding steady, as banks continue to support first-time buyers. Wage rises are starting to look healthier, while the cost of living remains low, meaning household finances are starting to finally put on some muscle. The threat of mansion tax has lifted, and several housebuilding initiatives are underway. Any remaining caution left from the run up to the election is dissipating, and lenders are optimistic that the summer will see the market stretch its legs and get into its stride.’[3