23rd April 2015
Gross mortgage lending up jumped a robust 21% month-on-month during March suggesting that the UK housing market is once again starting to gain traction.
The new statistics from the Council of Mortgage Lenders (CML) showed that lending was up by 7% on an annual basis to reach an estimated £16.5bn.
During the first three months of 2015, gross mortgage lending was therefore an estimated £44.9bn according to the trade body. The total represents a 12% decrease from the last three months of 2014 and a 3% decrease on the first quarter of 2014.
Commenting on market conditions, CML chief economist Bob Pannell said: “The underlying lending picture is stabilising. Sentiment and activity are showing early signs of improvement, and should be further supported by the effects of stamp duty reform. We expect to see lending strengthen over the next few months, albeit from a relatively sluggish start in 2015.”
Howard Archer, chief UK and European economist, at IHS Global Insight added: “The improved CML gross mortgage data for March supports our belief that the weakness in housing market activity is now bottoming out and we see activity gradually picking up over the coming months. Meanwhile, a current shortage of properties coming on to the market may well provide support to house prices. Consequently, we expect house prices to rise by 5% in 2015.”
Signs of improvement across the sector have become more common recently, where for example the latest survey evidence from Rightmove shows that visits to its website rose by 20% in March. In addition, the Bank of England reported that mortgage approvals for house purchases rose to a six-month high of 61,760 in February. The Bank’s latest credit conditions survey released in early-April, also highlighted that lenders expect demand for mortgages to pick up in the three months to end of June.
Looking ahead, Archer expects support for housing market activity to come from the recent stamp duty overhaul, very low mortgage rates, elevated consumer confidence, a pick-up in earnings growth and rising employment.
He added: “It is also likely that limited supply of houses will provide support to house prices over the coming months. The latest Royal Institution of Chartered Surveyors survey reported a tightening of supply in most regions in March. In addition, Rightmove reported that the number of newly marketed properties through to early April was down 4% on the corresponding period in 2014.”