Gross mortgage lending climbs by 8% in 2015 to hit seven year high

21st January 2016


Gross mortgage lending in 2015 marked the best 12 months for home loans in seven years according to new figures from the Council of Mortgage Lenders (CML).

The trade body numbers show that lending reached £19.9bn in December, some 3% lower than November’s £20.5bn but 23% higher than December 2014 tally of £16.2bn.

This brings the estimated total for the year to £220.3bn, marking an 8% increase on 2014’s £203.3bn and the highest annual gross lending figure since 2008.

Commenting on numbers CML economist Mohammad Jamei said: “Lending ended the year stronger than it started, with our estimate of nearly £20bn lent in December.

“This brings total lending to just over £220 billion for 2015 as a whole, and slightly higher than we had anticipated.”

It appears the low inflation environment, real wage growth, the improving labour market and competitive mortgage deals have all helped to underpin demand.

Jamei added: “Having said this, the upside potential looks limited over the near-term, as the supply of existing and new properties on the market remains weak, and affordability pressures weigh on activity.

“There is an added element of uncertainty as we wait to see the impact of tax changes on the buy-to-let sector.”

Looking ahead Howard Archer, chief UK and European economist at IHS Global Insight believes the upside for house prices is expected to be constrained by more stretched house prices to earnings ratios and tighter checking of prospective mortgage borrowers by lenders.

He adds: “Furthermore, it is still very possible that interest rates could start edging up late on in 2016.

“According to the Halifax, the house price to earnings ratio rose to 5.58 in December from 5.49 in November and 5.10 at the end of 2014, taking it to its highest level since January 2008. This is well above the long-term, 1983-2015, average of 4.14.”

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