17th December 2015
Gross mortgage lending reached £19.9bn in November, rising 23% on an annual basis, according to the estimates from the Council of Mortgage Lenders (CML).
The trade body’s numbers however show that last month’s total was 9% down on October’s tally of £21.9bn.
Commenting on the statistics, CML economist Mohammad Jamei said: “Lending is set to finish the year stronger than it started, with the pace of lending recovering over the summer months. As we’ve said for the best part of 2015, lending continues to be supported by strong fundamentals, which are low inflation, strong wage growth, an improving labour market and competitive mortgage deals.”
The CML now forecasts that lending in 2015 will climb to £214bn, up from its earlier estimate of £209bn.
“Looking ahead, upside potential appears limited as a result of affordability pressures and new supply challenges which will continue to weigh on activity,” added Jamei.
IHS Global Insight chief UK and European economist Howard Archer expects house prices to witness “pretty solid increases over the coming months” amid firm buyer interest, underpinned by largely supportive fundamentals as well as a shortage of properties.
Specifically he predicts house prices to rise by around 6-7% over 2016 but he cautions that there is “a significant upside risk to this forecast” as a result of the shortage of properties on the market.
Archer said: “It remains to be seen how the Chancellor’s measures in the Autumn Statement affect the housing market. In the near term, it is very possible that the decision to impose a 3% surcharge on Stamp Duty on purchases of buy-to-let properties and second homes from April 2016 will lead to an increase in housing demand and exert upward pressure on prices as prospective buyers look to beat the increase.
“Further out, the move could modestly dilute housing market activity and upward pressure on prices. While the Chancellor has announced measures aimed at boosting house-building in the Autumn Statement, it will take time before they have a significant impact on housing supply – and that is assuming that the measures prove successful.
“Furthermore, the shortage of properties is acute and so sustained – major progress needs to be made on the house building front to really eat into this problem.”