Annual rate of gross mortgage lending rockets by 30% in February

17th March 2016


Gross mortgage lending soared to £17.6bn last month, marking the highest total for a February since 2008 when gross lending reached £24.1bn, according to the Council of Mortgage Lenders (CML).

While the trade body’s estimate is however is 5% lower than January’s £18.5bn, it is 30% higher than February 2015’s tally of £13.6bn.

CML economist Mohammad Jamei said the recovery is being underpinned by market fundamentals in the UK, as wages grow and unemployment falls, helped by government schemes and competitive mortgage deals.

He added: “But we think it unlikely that there will be any significant acceleration in lending. While there may be a slight current boost to lending as some transactions seek to complete before the 1 April tax changes in the buy-to-let-sector, this is likely to be followed by a slight fall in activity.”

In addition, Jamei noted that affordability pressures continue to weigh on activity, “as does the low number of properties coming on the market, though this has been improving very recently”.

Howard Archer, chief UK and European economist at IHS Global Insight expects house prices to rise by around 6% over 2016 amid reasonably healthy buyer interest, which he said could be fuelled by markedly increased expectations that interest rates will not rise this year, and a relative shortage of properties.

“A potential major downside risk to housing market activity and prices comes from the vote on EU membership on 23 June. A vote for Brexit would be liable to see a marked hit to UK economic activity over the rest of this year and in 2017 amid heightened uncertainties, which would likely weigh down heavily on the housing market,” he added.

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