19th November 2015
Gross mortgage lending jumped by 19% on an annual basis during October to hit £21.8bn, marking the highest monthly total in more than seven years.
According to estimates from the Council of Mortgage Lenders, while the month’s tally was 8% higher than September’s lending total of £20.1bn, it was also the best since lending climbed to £23.6bn in July 2008.
Bob Pannell, CML chief economist, said: “As lending in the regulated mortgage space picked up over the summer months, the pace of recovery has improved. This looks set to continue over the closing months of the year with the factors helping support this recovery continuing to be low inflation, strong wage growth, an improving labour market and competitive mortgage deals.
“As a result lending this year is likely to exceed our forecast of £209 billion, though affordability pressures will limit business volumes for first-time buyers and movers meaning that we think the market has only modest further upside potential over the short-term.”
Howard Archer, chief UK and European economist at research group IHS Global Insight expects house prices to see “solid increases over the coming months” amid firm buyer interest and a shortage of properties.
He said: “We expect house prices to rise by around 6-7% in 2016 after a broadly similar increase in 2015. The shortage of properties poses a significant upside risks to these forecasts.”
However he added that any upside for house prices is expected to be constrained by “more stretched house prices to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the probability that interest rates will start rising gradually during 2016”.