Gross mortgage lending hits £22.1bn in June

According to the latest data and analysis from UK Finance (formerly CML), gross mortgage lending saw a 9% rise from May to June reaching £22.1bn and 3% higher than the £21.5bn lent in June last year.

Related topics:  Finance
Warren Lewis
20th July 2017
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Gross mortgage lending for the second quarter of 2017 was therefore an estimated £60.3 billion. This is a 3% increase on the first quarter of this year and a 6% increase on the £57.1 billion lent in the second quarter of 2016.

Mohammad Jamei, UK Finance Senior Economist, said: "A period of belt-tightening now seems to be underway as inflation begins to erode consumer spending power, and consumer confidence weakens. Given that the economy and housing market are closely linked, this has contributed to the activity plateau since the start of the year.

Looking ahead, housing market activity is likely to reflect economic conditions – a deterioration would likely dampen first-time buyer numbers and homeowners remortgaging – the factors that have supported lending recently.”

Adrian Moloney, Sales Director of OneSavings Bank, comments: “The mortgage market has faced its fair share of challenges in recent months, but despite these headwinds, lending activity continues to grow. On the one hand, real incomes are being squeezed as rising inflation overtakes the pace of wage growth, which is going some way to weaken demand for new purchases, but there remains a strong undercurrent of remortgaging activity as people look to take advantage of low mortgage rates driven by rock bottom interest rates.

Even with short-term volatility from political and economic uncertainty, we can be confident that the fundamentals of the market will prove their strength in the long-term, although we may well see a spike in activity over the summer as landlords come to terms with the impending PRA II changes."

Henry Woodcock, principal mortgage consultant at IRESS, said: “The overall trend this year continues to be one of a generally resilient market. Lending has shown an increase for the second consecutive month and sales in the first six months are on a par with last year, even without the April 2016 stamp duty sales boost.

Although landlord confidence has dipped in the last few months as tax regulations continue to squeeze the buy to let sector, growth in lending is continuing for first time buyers, home movers and those remortgaging.

Estate agents have continued to report that Brexit concerns are not deterring buyers or sellers, with sales growing through May and into June. According to Rightmove, June house sales were up 4.6% compared to last year.

House prices have slowed considerably, with RICS UK Residential Market Survey predicting price rises of 7%, compared with 17% in May. The price rise slowdown has encouraged sellers to price keenly and tempted buyers to proceed who may otherwise be concerned that the Bank of England will increase interest rates soon.

Competition among lenders appears to be intensifying, driving mortgage rates down to new lows. This combined with an unease felt by existing borrowers that rates could edge higher, may fuel the remortgage market in July, ahead of the usual holiday season slowdown.”

Jeff Knight, Marketing Director, Foundation Home Loans, commented: “On the surface, it may not seem like lending levels are particularly strong but look a little closer and re-mortgaging activity is keeping things moving along quite nicely. This is despite the challenge of inflation outstripping wage growth – as we may have seen an unexpected dip at the last reading, but inflation remains on an upward march.

First time landlords in particular remain in pole position, with purchase incentives and continued low mortgage rates taking the edge off uncertainty generated by the wider political and economic picture. Looking ahead to the looming PRA changes, however, it’s important the more established landlords are thinking ahead, planning and reviewing their positions.”

Jonathan Harris, director of mortgage broker Anderson Harris, says: "We are seeing a steady mortgage market with deals going ahead, usually with some negotiation on both sides. Buyers aren’t prepared to pay over the odds for a property and where a compromise can be reached with the vendor on price, transactions are going ahead. Cheap mortgage rates are helping boost the market and there are no signs that these are becoming more expensive just yet.

First-time buyers have plenty of choice with a plethora of high loan-to-value deals at rates that are not that much more expensive than lower LTV products. With the lack of buy-to-let investors in the market there is less competition and therefore more opportunities for them to get on the housing ladder."

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "These numbers are quite disappointing compared with this time last year when of course the market was in the doldrums to some extent following the introduction of the stamp duty surcharge. Nevertheless, we are not noticing any signs of a bigger correction in the market but more balance between supply and demand while realistic buyers and sellers are getting on with their business at more realistic levels.

Looking forward, we don’t expect a big change one way or another other than an acceptance that present conditions are likely to be the new norm."

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