Although this is down 29% against March’s lending total of £26.2bn, it is 16% higher than the £16bn lent in April last year making it the highest lending total for an April since 2008 (£25.3bn).
Mohammad Jamei, CML economist, said: “As we move past the stamp duty change that came into effect at the start of April, we expect to see a quieter second quarter, as some transactions that were due to take place were brought forward to the first quarter of this year. This is likely to mean that over the next few months buy-to-let takes a back seat as lending is driven by first-time buyers, movers and remortgage customers.
The underlying picture still shows signs of growth, as the market remains underpinned by strong fundamentals such as increasing wages and rising employment. But it is possible that the uncertainty around the upcoming EU referendum in June will weigh on activity in the upcoming months.”
Henry Woodcock, principal mortgage consultant at IRESS, said: “Even with the availability of high numbers of low interest rate mortgages deals, it’s no huge surprise that borrowing in April was so much lower than in March given the false peak which resulted from a rush to beat the Chancellor’s 3% tax hike on BTL. Will we see a rise in lending in May? That will depend on a number of factors.
Lenders may increase the number of long-term deals of up to 40 years to tempt borrowers struggling to afford shorter terms, but on the flip side, as the Bank of England interest rate remains static, lenders may increase interest rate margins. The lowest rate tracker deals have already risen by 0.24% in the last six months. The unknown effect of the EU vote in June may further depress lending in May as borrowers wait and see both the result and the impact on lenders and house prices.”
Richard Sexton, director of chartered surveyor e.surv comments: “The early rush we saw in the spring months is easing up and April marked an adjustment phase in the property market. But a reduction in lending is to be expected, and is certainly no cause for alarm. After a change in the timing of buy-to-let activity, the usual rhythm is slowly returning to the mortgage market, and lenders still have an appetite for investing in borrowers – particularly first-time buyers.”
Small-deposit loans totalled 10,985 in April, down 0.3% from the 11,018 granted in April 2015. This slight dip doesn’t reflect lenders’ willingness to help first-timers. A variety of mortgage choices, all aimed at helping first-time buyers get on the property ladder, are flooding the market. Looking ahead, there’s an EU referendum on the horizon and wider economic growth in the UK has been marked down. Yet, with a touch of caution, the lending market appears to be moving forward, unfazed.”
David Brown, CEO of Marsh & Parsons, comments: “April lending was never going to live up to the March hype. The mortgage market was a completely different kettle of fish in the run up to 1st April, characterised by massively increased borrowing to landlords and second-home owners, eager to make Stamp Duty savings while they could. But while we’ve seen a bit of a monthly comedown since then, the annual fundamentals are indicative of strength in the mortgage market.
Widely expected to be an underwhelming month, April has still set an impressive benchmark for this time of the year, with lending levels harking back to the pre-recession era. Buy-to-let investors are just one type of buyer after all, and borrowing isn’t going to ground to a halt while they have a breather. The Stamp Duty changes didn’t affect the plans and intentions of hordes of other first-time buyers and home movers, and in these areas buyer demand is still bursting at the seams.”
