Mortgage lending up 10% on an annual basis in September but market is “sitting on a plateau”

20th October 2014

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While gross mortgage lending was up 10.2% year-on-year in September it dipped 1% on August’s total to an estimated £17.8m.

The Council of Mortgage Lenders (CML), which compiled the statistics, asserted that given recent indicators and policy actions it believes there has been a gentle easing in market conditions. CML chief economist Bob Pannell said: “There is growing evidence that mortgage lending activity, and the housing market, are sitting on a plateau.”

Meanwhile, the Bank of England’s Trends in Lending Survey for October confirmed that some of the slowdown in mortgage lending over the summer was due to lenders getting to grips with operation issues related to the introduction of the Mortgage Market Review (MMR) in late-April.

Howard Archer
 chief UK and European economist
 IHS Global Insight said: “The fact that mortgage approvals in August remained substantially below their January 2014 peak levels even though lenders are now getting to grips with the MMR suggests that there has been an underlying loss of momentum.”

While the Bank of England credit conditions survey released earlier in October had indicated that lenders expect demand for mortgages to pick up in the current quarter, the Trends in Lending Survey reported that ‘in recent discussions, some major UK lenders noted that they were particularly uncertain about the pace of underlying demand for secured lending’.

“Overall, the CML data and comments, and the Bank of England survey, do little to dilute belief that housing market activity has lost momentum compared to the early months of 2014. This is reinforced by latest survey evidence from the RICS and Hometrack showing reduced buyer interest,” added Archer.

With housing market activity off its early-2014 highs but likely to remain at a reasonable level, he believes that house prices will rise at a decent but more limited rate over the coming months. Specifically, he expects house prices to increase by around 1% quarter-on-quarter in the final three months of 2014 and by around 5% in 2015.

 

 

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