Highest October gross mortgage lending total since 2008

CML has reported today that gross mortgage lending was up 5% month-on-month, estimating that gross mortgage lending reached £19 billion in October.

Related topics:  Property
Warren Lewis
20th November 2014
Property

This is 5% higher than September (£18bn), and 8% higher than October last year (£17.5bn). This is the highest lending total for an October since 2008 (£18.6bn).

CML economist Mohammad Jamei observes:

The market is in a steadier state than it was earlier in the year. As the temporary impact of implementing the mortgage market review fades, a clearer picture of the mortgage and housing market is emerging. Nearly all indicators in the housing market align with our view of a gentle easing in market conditions.

While the housing market has cooled in recent months, mortgage lending continues to be underpinned by positive factors. With expectations of the first interest rate rise moving to the fourth quarter of next year, as well as positive forecasts for growth, pay and unemployment, there is potential for market activity to gain traction in the new year.

Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments:
 
“The monthly rise in lending for October shows there’s plenty of life left in the market following the Mortgage Market Review (MMR). Successive falls in the two previous months were most likely a delayed effect as applications slowed during the switchover. But the signs are that activity is back up and running, with lenders firing on all cylinders to record the second highest monthly lending total of the year.
 
Anyone currently looking for a mortgage is in the fortunate position of having a choice of low rate products and the reassurance that affordability checks will ensure their finances can stand up to future rate rises. The 0.5% base rate continues to live a charmed existence, and while policy makers are caught up in a game of cat and mouse over the timing of the first rise, there is every chance that product pricing has further to fall – making the outlook even better for borrowers.
 
The market has been fundamentally reshaped under MMR and the return to growth has meant an especially busy time for brokers, who are increasingly in demand for advice on an unprecedented number of products.* Lenders are becoming more reliant on intermediaries to manage demand in a cost effective way and help match suitable customers to the right offers.”

Richard Sexton, director of e.surv chartered surveyors, commented:

“Mortgage lending has been travelling a bumpy track, with regulatory potholes like MMR and LTI-caps throwing the recovery temporarily off course and impacting buyer confidence. But now things are looking much steadier and lending is beginning to recover again – at a sensible and sustainable pace.

First-time buyers, however, may need some coaxing back to the market. The proportion of higher LTV lending fell sharply in October, as many buyers were put-off by extra regulation, alongside growing wider economic uncertainty. A declining stock of affordable homes is also narrowing their options.

A year ago, Help to Buy acted as a confidence booster and kick-started the market, but the recent regulation has knocked some of the positivity back out of lending, despite mortgages being more accessible than ever. Thankfully, as the prospect of a rate rise fades away far into 2015, and rates remain at record lows, this lost energy is starting to return.”

Peter Rollings, CEO of Marsh & Parsons, comments:

“Following the considerable swell at the beginning of the year, the current tide of the housing market has soothed lately.  Property price rises have relaxed into a more sustainable pace but growth has certainly not hit the rocks – and this is just a natural turn in the lifecycle of a market. There’s a renewed spring in the step of mortgage lending this October, climbing 5% over the month. And the introduction of the Mortgage Market Review and stricter affordability regulations this April have not clouded the overall progress that has been made over the past year.
 
“With an interest rate rise not expected before late next year, spurring on a host of attractive mortgage products, buyers and sellers still have a lot to be feeling confident about.  Calmer trading conditions, more choice on the market, and less fierce competition will ensure activity finishes on a strong note at the end of the year.”  

Paul Smith, CEO at haart, comments on today’s CML Gross Mortgage Lending data:
 
“These new figures show that lending is alive and well and breaking records despite stricter borrowing criteria. Lenders are keen to grow market share so first-time buyers and ladder steppers alike are currently benefiting from a new range of excellent mortgage deals. Pre-election calm has descended on the market but savvy buyers and sellers will run with the window of opportunity that this creates.”
 

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