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Mortgage Lending Soars in May, But Uncertainty is Expected for the Near Future
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
Mortgage lending soared in May, hitting the highest level for the month since 2008, according to the Council of Mortgage Lenders (CML). However, uncertainty is expected to hit the property market in the near future, following the Brexit vote.
The CML estimates that gross mortgage lending reached £18.2 billion in May, up by 4% on April and 14% higher than in May last year.
Mortgage Lending Soars in May, But Uncertainty is Expected for the Near Future
In April, mortgage lending totalled £17.6 billion, while it stood at just £16 billion in May 2015.
This year’s figure for May marks the highest level for the month since 2008, when gross lending reached £23.7 billion.
The Senior Economist at the CML, Mohammad Jamei, says: “Looking ahead, there is likely to be considerable uncertainty as a result of the EU referendum decision.
“We expect this to affect sentiment and reduce activity below levels that would otherwise be expected in the near term, as both buyers and sellers adopt a wait-and-see attitude until the dust begins to settle.
“Market fundamentals underpinning house prices still look sound, and we do not expect significant house price falls, especially given the current supply-demand imbalance.”
Research conducted over the weekend claims that many homeowners are feeling discouraged from selling their properties due to the EU referendum outcome.
The Chief Executive of the National Association of Commercial Finance Brokers, Adam Tyler, comments: “A wait-and-see attitude and increased caution among buyers and sellers alike is inevitable after the unprecedented political turbulence of the past few days.
“Market fundamentals still look sound and the sharp imbalance between supply and demand will prevent a material decline in prices. Sentiment may have shifted dramatically over the past few days, but the structural imbalance between supply and demand is as strong as ever.”
He explains: “Demand naturally tapered off in the buy-to-let sector following the Stamp Duty surcharge, but it may experience a bounce after Friday’s referendum result.
“Current market and politico-economic volatility could benefit buy-to-let as investors once again look to bricks and mortar as a safe port in a storm, despite the new entry premium.”
Tyler adds: “The fact that the bank rate is now more likely to go down than up in the near term will provide further support to the property market. Understandably, there’s a lot of hysteria surrounding the trajectory of the property market, but our own view is that the reality will prove to be relatively benign.”
The Bank of England’s full response to the Brexit can be found here: /bank-england-releases-statement-following-eu-referendum-result
