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Home lending appears to be on the brink of recovery after a dip due to new mortgage rules, the latest gross lending data from the Council of Mortgage Lenders suggests. The CML April estimate for total gross lending is £16 billion, 1% down on the previous month and 4% lower than the £16.7 billion of lending last April. But according to Mohammad Jamei, CML economist, lending appears to be in the throes of an incipient recovery even although lending in April was fractionally down on the previous month and year as this comes after a stronger March. ‘Overall, we now seem to be on the cusp of a modest lending recovery. Household finances are generally improving as earnings growth continues to outstrip inflation, and mortgages are being offered at extremely competitive rates. As a result, we expect to see stronger lending in future months,’ he said. Paul Smith, chief executive officer of haart estate agent, believes that the mortgage market is in rude health and despite the doom and gloom in the election run-up, consumers have been undeterred by the prevailing uncertainty. ‘Mortgage lending is still down on April 2014 but 2014 was an exceptional year where property prices and demand were speeding along beyond all expectation and an application of the brakes is no bad thing,’ he said. ‘Lower, but still strong, house price growth and levels of demand that aren’t dominating the headlines, is actually good for overall sentiment and both buyer and seller confidence. With the new majority government bedding in and the continued advantageous economic climate and government support for consumers, we expect mortgage lending to be on an upward trajectory for the rest of this year,’ he added. John Eastgate, sales and marketing director of OneSavings Bank, said that there is no doubt that pre-election jitters took their toll on borrower demand in April ‘But the mortgage market hardly ground to a halt. Mortgage rates remain near historic lows, and this continues to drive underlying activity,’ he pointed out. ‘On top of this, we have seen deflation take hold, pushing back the prospect of a hike in interest rates. Combined with improving earnings, this will boost the borrowers' budgets. With the new government now in situ, any lingering uncertainty has been put to bed, and sentiment has undergone a palpable bounce,’ he explained. ‘There are already signs that mortgage activity is on the increase, with big ticket purchases returning, and the market expects positive momentum to build as the year progresses. Yes, affordable mortgages for those with the smallest deposits remain thin on the ground, holding back first time buyer levels, but an increasingly buoyant buy to let market will support total lending in 2015,’ he added. Continue reading →
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