Gross mortgage lending hits £20.5bn in September

According to the latest data from CML, gross mortgage lending reached £20.5bn in September - a 7% drop against August’s lending total of £22.1bn and 2% higher than the £20.1 billion lent in September last year.

Related topics:  Finance
Warren Lewis
20th October 2016
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This is the highest September figure since 2007 when gross lending reached £29.9 billion.

Gross mortgage lending for the third quarter of 2016 was therefore as estimated £63.6 billion. This is 11% higher than the second quarter of this year, and 4% higher than the third quarter of 2015.

Mohammad Jamei, CML senior economist, commented: “Remortgage activity looks set to grow, helped by attractively priced mortgage deals encouraging borrowers to refinance. Prospects for house purchase activity continue to look slightly subdued, when compared to the same period a year ago.

Despite this, housing market sentiment continued to improve in September, after recovering in August. As a result, we expect a modest rise in approvals, though at levels lower than seen earlier this year, as the lack of properties on the market for sale and affordability constraints continue to bear down on borrowers.”

Henry Woodcock, principal mortgage consultant at IRESS, said: “The gross lending trend since the summer has been in an upward trajectory, so I’m surprised the market has stumbled, with gross lending down 7% to £20.5 billion from August.

There was a 7% rise in gross lending in August, but the month saw a drop in approvals which has followed through into September, effectively wiping out that gain. In spite of the fact that positive movements in the market all pointed to a continued recovery from the post-referendum and summer lull, borrower sentiment has not matched market expectations. However, I think this is just a blip.

The total number of mortgage products has increased over the last 19 months to an eye watering 24,415, pointing to fierce competition. House prices fell by 0.5% in Q3 2016, the first quarterly decline seen in four years according to Halifax’s House Price Index which - combined with the August base rate cut – may still tempt borrowers to remortgage or move house. The impending closure of help to buy at the end of the year will also likely see a last minute rush by low deposit borrowers to secure those attractive deals.

No doubt we’ll see lower numbers as we head into the mid-winter seasonal slow-down in activity, however the signs for October still look pretty positive.”

Peter Williams, Executive Director of the Intermediary Mortgage Lenders Association (IMLA), had this to say: “The latest data from the Council of Mortgage Lenders depicts a mortgage market undeterred by the EU referendum result and very much open for business. The 11% increase in lending between Q2 and Q3 shows that borrowers weren’t put off by the economic shadow that a drawn-out Brexit process threatens to cast and lenders haven’t suppressed their appetite to meet this demand. September is often a month when house hunters renew their pursuits after pausing their over summer, but this year’s saw the highest September figure since before the global downturn.

Any potential bumps in the road are unlikely to come from mortgage lenders as the availability of competitively priced deals remains high – both for purchasers and remortgagors – but issues on the supply side could inhibit activity. The consumer appetite is there, but the simple fact remains that there simply aren’t enough properties coming on to the market at the moment to satisfy this demand, so more thought needs to be given as to how to increase transactions – not least by revisiting Stamp Duty” 

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