17th September 2015
The Council of Mortgage Lenders estimates that gross mortgage lending across the UK soared at an annual rate of 12% to reach £20bn in August.
However despite the strong year-on-year gain, which marked the strongest August performance since 2007, last month’s total is 8% down on July’s tally of £21.7bn.
Looking at the data Bob Pannell, CML chief economist, said: “Mortgage lending is currently enjoying its best spell since 2008, on the back of a pick-up in house purchase and remortgage activity over the summer months.
“August’s lending of £20bn marks the third month in a row of strong year-on-year growth and is the highest August figure since 2007. We expect further modest growth for the rest of the year, although affordability pressures are likely to limit gains for first-time buyers and home movers.”
Henry Woodcock, principal mortgage consultant at IRESS, added that while mortgage lending came off the boil in August, compared to July, he believes the slowdown should not be misinterpreted as the market grinding to a halt.
He said: “Mortgage rates remain at record lows, buoying demand, while we are also seeing a new flurry of low deposit mortgage products hitting the market. All of this bodes well for total lending levels for the remainder of the year, in spite of concerns of an interest rate rise.
“In the longer term, affordability will remain the key constraint for the market, preventing more rapid improvement. While wage growth is still showing promising growth, it is being outstripped by rising house prices, and we won’t see this growth subside until the supply and demand balance is addressed.”
John Eastgate, sales and marketing director of OneSavings Bank added that lending was always going to struggle to top the seven year high the market witnessed in July. He added: “However, let’s not confuse a monthly blip with a long-term trend. Buy to let lending remains healthy, and conditions are supportive for homeowners too, with mortgage rates still near the bottom, while we are also seeing a return of low deposit products, which will support activity.
“Yes, house price growth will continue to stretch affordability, so it’s encouraging that wage growth is accelerating, although that does, of course, bring with it inflationary pressures and the prospect of interest rate rises.”