This is 4% higher than February’s gross lending total and 33% higher than March last year (£11.6 billion).
Gross mortgage lending for the first quarter of this year was therefore an estimated £46.3 billion. This represents a 10% decrease from the last three months of 2013, but a 37% increase on the first quarter of 2013 (£33.8 billion).
CML chief economist Bob Pannell observes:
"Alongside benign developments in the wider UK economy and the labour market, housing market sentiment continues to strengthen. 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."
Simon Crone, Vice-President Mortgage Insurance Europe at Genworth suggests that today’s figures reveal how far the mortgage market has come from this time last year.
"However the traditional Spring bounce in lending may not occur in 2014 due to a combination of factors most notably the Mortgage Market Review (MMR) rules that come into force on the 26th April.
It will be intriguing to see the lending figures for the next few months as it is highly likely lenders will pull back on their lending levels during the next quarter as they seek to ensure their compliance with the new regulations plus the tighter affordability rules mean that a number of borrowers will not be able to access finance as they would have pre-MMR.
For first-time buyers looking for mortgages in the next few months the market may not be accommodating as it was at the start of the year. Even with the growing availability of 90/95% LTV mortgages first-timers still have considerable issues to overcome in terms of saving for a deposit and meeting these new criteria conditions from lenders.
Recent research from Genworth revealed that British households believe the single biggest barrier to home ownership remains their ability to save enough for a deposit. Therefore it is absolutely vital that the supply of low-deposit mortgages continues not just through the period of the Government’s Help to Buy mortgage guarantee scheme – which is due to finish at the end of 2016 – but far beyond this. The need for high LTV mortgages is not a short-term problem and we need to ensure the market is in the best possible place in order to continue supplying these products both now and well into the future.”
Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments:
“Growth in the mortgage market shows no sign of abating, with gross lending up by a third since this time last year. Improving economic conditions such as rising wages and falling unemployment have helped to maintain the consumer confidence cultivated by easier access to mortgage finance in 2013. Throw historically low mortgage rates into the mix and buyers have had plenty of encouragement to look at getting finance to buy a new home.
Help to Buy has also brought the high loan to value (LTV) market back to life, and as a result we have seen the average home buyer in March putting up less of a deposit relative to the value of their purchase than at any point in the past five years*.
With the Mortgage Market Review (MMR) coming into force next week, we may see a slight cooling in the mortgage market as lenders and brokers get to grips with new systems and lengthier application processes. However, the changes brought about by MMR will ensure that mortgages are both affordable and sustainable, laying the foundations for a healthy mortgage market in the long-term.”
David Newnes, director of Your Move and Reeds Rains, commented:
“With gross mortgage lending gradually rising, now up by a third compared to a year ago, there’s a greater sense of confidence among both borrowers and lenders. A more accessible mortgage market has attracted more first time buyers, and increased higher LTV lending has made aspirations of homeownership a reality for many who have a relatively small deposit saved.
However better mortgage product availability should be coupled with an increasing supply of property coming onto the market. House building will therefore need to accelerate to satisfy the growing demand and balance market conditions. With low inflation and a revived jobs market starting to relieve the recent pressure on household finances, more aspiring buyers will be able to save for that all-important deposit and access the property ladder while the Help to Buy scheme continues.
Increased supply will safeguard the recovery and ease competition for property.
Lending has carried on since the highs witnessed at the end of last year, as the more stringent checks and thorough measures ushered in by the Mortgage Market Review begin to come into effect. This will ensure that borrowing continues to progress at an orderly and responsible rate. However, it is expected that there may be a small dampening of the market while these changes settle in.”
Peter Williams, Executive Director of the Intermediary Mortgage Lenders Association (IMLA), comments:
“To end the first quarter of 2014 with gross mortgage lending up by 37% year-on-year would put us on track for an annual total around the £240bn mark if the same rate of increase continues for the rest of the year.
Of course, the market’s improving performance at the end of last year means we’re unlikely to see the same level of uplift through until December. More importantly, we’re less than 10 days from the most significant recent change in mortgage market regulations, which will shift us down a gear as lenders and brokers adapt to new systems and processes underpinning affordability tests.
Brokers and lenders have been working hard to prepare and do their best to take the changes in their stride. Beyond the inevitable dampening effect as the new regime takes effect, we are still looking at a strengthening recovery which puts IMLA’s forecast of £215bn gross lending for 2014 within reach. Pent up demand from first time buyers is fuelling the chances of a long term, sustainable recovery, but these also hinge on efforts to tackle the woefully inadequate housing supply and calm housing inflation.”
