Total mortgage lending for 2013 estimated at £177bn. Help to buy led to 13,000 transactions

21st January 2014

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Gross mortgage lending was an estimated £17 billion in December, according to the Council of Mortgage Lenders jumping 49% from the previous December when it stood at £11.4bn. This is the highest total for December since 2007 and brings the estimated total for the year to £177 billion, up from £143 billion in 2012.

Gross lending for the fourth quarter of 2013 was therefore an estimated £52 billion. This represents a 5% increase on the third quarter of last year and a 38% increase on the fourth quarter of 2012 (£37 billion). This is the highest lending amount by quarter since quarter three of 2008.

Commenting on market conditions in this month’s Market Commentary, CML chief economist Bob Pannell said: “Short-term growth prospects for the housing market and the wider economy look very positive. Mortgage lending was stronger than we expected in the closing months of 2013, but lenders expect little if any boost to borrower demand this quarter.

“While some of these gains reflect government schemes, the rationale for the positive narrative is a much broader one, reflecting such factors as the improving economy and jobs market, consumer confidence and competitive mortgage deals”.

In its market commentary the CML adds: “As in previous months, much of the strength in lending reflects house purchase activity. First-time buyer numbers have improved significantly over the past year, with a pick-up in the number of movers too in more recent months.”

“While some of these gains reflect government schemes, the rationale for the positive narrative is a much broader one, reflecting such factors as the improving economy and jobs market, consumer confidence and competitive mortgage deals.”

The trade body says Help to Buy transactions represented a fraction of the overall 120,000 increase in housing transactions in 2013. There were about 13,000 Help to Buy equity loan transactions last year, and fewer than 1,000 under the mortgage guarantee scheme.

Despite the closing months of last year being stronger than we had expected, the CML says it remains comfortable with our £195 billion forecast for gross mortgage lending this year.

Richard Sexton, director of e.surv chartered surveyors, says: “The mortgage market is whistling along the road to recovery. Lending has increased by a half over the course of a year, as a result of the potent formula of increased consumer confidence, better headline mortgage deals, and a greater willingness to lend to borrowers with smaller deposits. High LTV lending is 60% above last year, which has encouraged more first-time buyers to invest in property.  The property market is now set for a strong 2014.

“The task now is to keep the wheels in motion, and not to let growth tail off as spring approaches. There are a few potential pitfalls ahead including new Mortgage Market Regulations coming into play in April. Although lenders have been preparing for this well in advance, the changes may still slow lending slightly.

“The biggest challenge is to hang onto house prices, and ensure they rise at a sustainable pace. But rising prices come as a result of a severe supply shortage. The missing piece in the puzzle is house-building. If we build more houses, there would be less of a scramble over available property, and fewer bidding wars between buyers. It would help rein in price rises and keep the property market thriving at both ends of the spectrum.”

 

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