Mortgage lending reached an eight-year high in March, defying the slow trends seen at the end of last year.
Data has indicated that this has reversed and confidence has returned to the housing market. Any doubts of a market recovery at the end of 2014 have been upturned and positivity is driving the industry.
Buy-to-let mortgage lending in the first quarter (Q1) of 2015 increased by almost 20% compared to Q1 2014. This substantially outpaced residential mortgage lending, which rose by just 1.6% in the same period.
Buy-to-let is expected to continue growing, as traditional savings accounts offer low returns and savers seek out the best ways to invest their money. Furthermore, new pension rules allow those aged 55 and over to spend their retirement funds however they like, meaning more will take their cash in a large sum.
Retirees are looking to invest in property, which will generate a regular income and is sought after by those priced out of buying a home. The lack of housing supply makes buy-to-let an appealing option.
Total mortgage lending for Q1 2015 reached £36.2 billion, an increase of 5.4% from Q1 2014. Lending in March was also up 24.3% monthly compared to February 2015, hitting £15 billion.
These improvements spread around the UK, with just two areas, Perth and the Western Isles, reporting negative growth in March.
The average value of each mortgage has also grown and was £177,060 in Q1 for a residential mortgage and £151,033 for buy-to-let loans. These increases could be due to Stamp Duty reform, announced in December 2014, which is driving prices higher as they do not need to sit around thresholds anymore.
March was also the top sales month for mortgage brokers in eight years. But although lending has grown, the amount of active brokers has dropped in the last 12 months, from 8,288 in Q1 2014 to 8,028 in Q1 2015.
Mortgage providers should remember to identify the networks and firms that are responding to the changing mortgage market and requirements of the Mortgage Market Review (MMR).
The year started with the lending market falling behind January 2014 figures. However, positive data from February and March has reinforced confidence in the market, and it is believed that the rest of the year will continue upwards.