Mortgage lending surge

THE TIMES | Saturday September 24 2016
Tom Knowles Property correspondent

Fears about the housing market after the vote for Brexit have proved “wide of the mark”, according to the council of Mortgage Lenders as it reported the highest level of mortgage lending in August for nine years.

The council, whose members represent 97 percent of all residential mortgage lending in the UK, said that a total of £22.5 billion had been lent last month. This was 7 percent higher than July and up by 15 percent compared with August last year. The CML said that it was the highest August figure since 2007, when gross lending reached £33.6 billion.

Mohammad Jamei, senior economist at the CML, said: “Widely voiced fears in recent months about the housing market have proved to be wide of the mark.”

The figure from the CML includes lending for remortgaging and house purchases by buy-to-let landlords, as well as owner-occupiers. It records the point at which money is handed over from the lender to the borrower, rather than the mortgage approval, meaning that the figure is also likely to
include loans arranged before the European Union membership referendum.

Mr Jamei said that the recovery in sentiment, after a subdued mortgage market in June and July, was partly attributable to the Bank of England cutting interest rates to a new low of 0.25 percent last month and introducing the Term Funding Scheme, which provides funding for banks to help lenders to pass on lower rates to their customers.

Mr Jamei said that the onset of autumn, traditionally one of the most active periods for the housing market, will lead to a further rise. “A subsequent uptick in approvals is anticipated, albeit still levels lower than earlier this year as affordability constraints and lack of properties on the market for sale continue to bear down on borrowers, “he said. “The Bank also continues to indicate another rate cut on the cards, if medium-term prospects remain unchanged.”

Mark Harris, chief executive of SPF Private Clients, a mortgage broker, said ”Much of our business – as much as 70 percent – is mortgaging as borrowers look for some certainty while taking advantage
of record low rates and snap up a cheap fixed deal. With speculation that there is another base rate cut to come, mortgages are likely to remain extremely competitive, which should tempt further buyers to market, as long as they can find the property they wish to buy.”

The figures also echo a more positive stance from the latest survey of the Royal Institution of Chartered Surveyors that suggested confidence had bounced back after a sharp fall in June and July. Surveyors and estate agents predicted a rise in price and sales volumes, but said there was still
severe shortage of housing stock for sale.

Estate agents said that September was proving to be a busy month. Jeremy Leaf, an estate agent in north London, said “We have seen business pick up considerably in September as people returned from holiday keen to get on with their lives…Nevertheless buyers are negotiating very hard, which is
inevitably leading to some softening in prices.”

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