Encouraging new figures suggests that mortgage lending within the UK may be showing signs of a recovery.
The statistics from the Council of Mortgage Lenders (CML) indicate that total mortgage lending hit £16.5bn in March. This was 21% higher than results recorded in February.
However, lending is down 12% in the first quarter of 2015, in comparison to the final three months of 2014. Additionally, lending is down 3% on a year-on-year basis.[1]
More positively, lending in March was up 7% on the same month last year.
Stabilising
CML chief economist Bob Pannell believes that the results suggest that the market is beginning to become stabilised. Pannell said that, ‘sentiment and activity are showing early signs of improvement, and should be further supported by the effects of stamp duty reform.’ He went on to state that, ‘we expect to see lending strengthen over the next few months, albeit from a relatively sluggish start in 2015.’[2]
Buy-to-let lending however continues to go from strength-to-strength. Data released from the Bank of England indicates that gross overall lending for buy-to-let investment purposes during 2014 was £27.4bn.[3]
Gross buy-to-let advances for remortgaging have also substantially increased during recent years. When figures for overall mortgaging are considered, buy-to-let advances went from having a 32% in 2002 to 52% in 2014.[4]
Fighting the nerves
David Whittaker, managing director of Mortgages for Business, believes that buy-to-let is not experiencing the pre-election jitters seen elsewhere in the housing homeowner market. Whittaker said that, ‘election uncertainty might be putting some people off buying a home, but in the meantime millions of tenants still need somewhere to live and landlords are investing in new properties, as buy-to-let mortgage rates reach new lows.’[5]
Whittaker also believes that, ‘rents are picking up on the back of a strengthening jobs market, supporting yields while steady price growth is still providing an additional bonus of capital growth to many landlords.’[6]
Uncertainty
However, Mr Whittaker suggested that there might be clouds on the horizon, saying that, ‘the latest noises from the Bank of England indicate how the powers that be seem as unsure about the future path of interest rates.’ He remains confident however that, ‘when rates do rise, landlords will be in a better position to stand up to headwinds than a year ago as their tenant’ financial health improves.’[7]
[1-7] http://www.propertywire.com/news/europe/uk-home-lending-march-2015042310427.html