2016 gross mortgage lending at highest levels since 2008

The latest report from The Council of Mortgage Lenders has revealed that gross mortgage lending reached £20.4bn in December.

Related topics:  Finance
Warren Lewis
26th January 2017
housing market 55
"The UK housing market, much like the wider UK economy, ended 2016 on a generally positive note."

According to the data, this is 4% lower than the previous month (£21.2bn) but 4% higher when compared year-on-year with December 2015's total of £19.7bn.

CML revealed that he estimated total for the year to £246bn, a 12% increase on 2015’s £220bn and the highest annual gross lending figure since 2008.

Gross mortgage lending for the fourth quarter of 2016 was therefore an estimated £62 billion. This is a 3% decrease on the third quarter and closely matches the 61.8 billion lent in the fourth quarter of 2015.

Mohammad Jamei, CML senior economist said: “The UK housing market, much like the wider UK economy, ended 2016 on a generally positive note.

Approvals for house purchase have recovered strongly of late, and this should feed through to lending figures in the early months of 2017. The current availability of mortgage credit is benign, and the real issue continues to be a dearth of properties on the market, which adds to the challenges facing would-be buyers.

Uncertainty associated with political factors and prospective changes to the tax treatment of landlords will weigh on prospects for the year ahead.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, had this to say: "2016 turned out to be an encouraging year for the mortgage market, despite significant headwinds created by the increase in stamp duty for landlords and second homeowners in April and the uncertainty surrounding the referendum. Record low mortgage rates were responsible for this resilience, with many borrowers remortgaging to take advantage of the lowest rates ever while first-time buyers were able to take advantage of an increase in the number of high loan-to-value deals.

Moving into this year, Swap rates have settled down since the beginning of January and several lenders have announced competitive deals on the back of these. HSBC, Barclays and Aldermore have all launched cheaper rates this week and an appetite to do business among lenders shows no signs of abating. This is particularly good news for those borrowers who require a straightforward ‘vanilla' mortgage but we would like to see more tweaking of criteria and innovation to make it easier for other groups such as older borrowers and the self-employed to access mortgage finance rather than just cheaper rates."

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: "These figures are positive news and reflect other surveys which have shown that the property market showed a lot more resilient than some gave it credit for last year, particularly after the referendum.

However, what sets the tone for the new year is approvals in the pipe line and market sentiment, both of which have been fairly neutral so far. What we are seeing on the ground are fewer but more serious buyers keen to take advantage of the opportunity afforded by a market with more balance between supply and demand."

Henry Woodcock, principal mortgage consultant at IRESS, said: “The market in September and October was steady with November seeing a 3% increase. December’s gross mortgage lending reached £20.4 billion in December. This is 4% lower than November (£21.2 billion) and 4% higher than December 2015. Overall, the estimated gross mortgage lending total for 2016 is £246 billion, a 12% increase on 2015’s £220 billion. This is the highest annual gross lending figure since 2008.

The 2016 housing market ended the year in good shape with the Halifax house price index indicating that the property market in the UK was up 6.5% in December 2016 compared to December 2015.

Estate agents also saw increased movement in December. Housing activity rose by 8% on an annual basis and has surged 40% compared to the same period two years ago, according to Connells Survey & Valuation data. The buy-to-let market’s loss appeared to have been the owner-occupiers gain, as the number of first-time buyer valuations rose by 26% compared to December 2015.

Overall the market in 2017 is likely to be dampened by uncertainties around the economy and buy-to-let lending levels are expected to be lower as further tax changes take effect.”

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