Housing boom continues apace as mortgage lending rockets by more than 33%

17th April 2014


The UK’s housing market is sustaining its robust momentum with mortgage lending rising to £15.4bn in March, marking an annual increase of 33.2% writes Philip Scott.

According to trade body the Council of Mortgage Lenders, the month’s total was up from £14.8bn in February, and from £11.6bn 12 months ago.

It also meant that gross mortgage lending was up 36.7% year-on-year at £46.3bn in the first quarter of 2014.

But gross mortgage lending was down 10.0% quarter-on-quarter in the first three months of 2014, as activity usually sees a seasonal dip over the period .

Commenting on the numbers, CML chief economist Bob Pannell says: “There are currently no signs of significant market disruption, arising from the imminent application of new lending rules associated with the Mortgage Market Review. While some mortgage lending indicators have eased back gently, this is from the very high levels of recent months.

“The Financial Policy Committee continues to be vigilant to housing market developments, and to remind the market of its ability to act before problems to financial stability set in.”

Howard Archer, chief UK and European economist at IHS Insight says: “It is certainly justifiable to talk of a house price bubble in London – but the strength of house prices is not yet a serious problem outside of the capital and housing market activity is still not unduly strong compared to long-term norms, so in these respects it is premature to talk of a general housing market bubble.”

However he notes that the risk of an overall housing market bubble developing is very real as the strength in house prices is becoming more widespread while house market activity clearly retains appreciable underlying momentum.

Archer adds: “Consequently, policymakers need to keep a very close watch on how the housing market develops over the coming months and to be fully prepared to act. Once strong upward momentum has developed in the housing market, it can be hard to stop.”

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