"Mortgage lending is holding up well, but under the surface buyers face mixed fortunes"
According to the report, this is 8% lower than January’s lending total of £19.8bn and closely matches the £18.1bn lent in February last year.
Mohammad Jamei, CML senior economist commented on the figures: “Mortgage lending is holding up well, but under the surface buyers face mixed fortunes. First-time buyers and customers who are remortgaging are driving total lending, while home movers and buy-to-let remain weak.
The weakness in home movers means few properties are coming onto the market for sale, which is aggravating a supply demand imbalance that has characterised the market since late 2013. This looks set to continue at least over the next few months, posing an obstacle for would-be borrowers.”
Henry Woodcock, principal mortgage consultant at IRESS, said: “The month of February normally sees a decrease in lending compared to January. That trend has continued with gross lending for February of £18.2 billion, a drop of 8% compared to January, and only fractionally higher than February 2016.
Even though we’ve seen a decrease in lending from January, first time buyer activity, supported by government schemes has still been strong, as has growth in remortgaging. Overall, average house prices are expected to grow modestly this year, however we’re likely to see significant regional variance. Growth will most likely be outside the cooling capital market and more in regional centres such as Birmingham and Manchester.
There was no stimulus to housing provided in the Spring Budget, and forecasts by estate agents indicate that the number of home transactions completed will fall by 11 per cent this year. However, I still expect March gross lending to be slightly higher than February, although it will not reach the heady height of 2016 which was driven to a great extent by impending buy-to-let changes.”
Of course, one thing could change this. The recent jump in CPI inflation to 2.3% is the first above-target rise since November 2013. No doubt this will put some pressure on the Bank of England’s Monetary Policy Committee (MPC) to start considering interest rate rises. If that were to happen it would obviously mean higher monthly payments for people on tracker and variable mortgages, and lenders would react quickly to pull some of the very cheap mortgage deals. With this mood music playing, it wouldn’t surprise me if we see an unusually higher spike in mortgage activity over the coming months as people look to bag the best deals while they’re still available.”
