The CML said that this is the highest monthly total since September 2011 when it was £13.6 billion and the highest monthly total for March since 2008 when it was £23.9 billion.
Gross lending for the first quarter of this year was therefore an estimated £34.4 billion, down from £37.8 billion in the previous quarter but a 13% increase from the first three months of 2011.
‘The increase in our March lending estimate appears to be almost entirely due to stronger house purchase activity. The most likely explanation is that buyers wanted to complete their transactions before the end of the stamp duty concession on 24 March,’ said CML chief economist Bob Pannell.
‘The underlying picture for house purchase activity has been relatively buoyant in recent months. However, we would be surprised if we did not see a drop in transactions over the next few months, following the end of the stamp duty concession, especially as it will take some while for NewBuy transaction levels to build,’ he added.
However it will not necessarily be plain sailing, according to Paul Hunt, managing director of Phoebus Software. ‘Unfortunately, the crest of every wave is followed by a trough and is followed by a trough and March’s mighty growth in lending is no exception. These figures demonstrate the vital importance of the stamp duty saving the government withdrew at the end of last month. First time buyers surged through the closing door in the run-up to March 24 and we can expect that those who didn’t make the cut to spend the next few months sitting on their hands, having to save larger deposits before they can take the plunge,’ he explained.
‘But at least the figures demonstrate there is still a substantial body of would-be first-time buyers looking to leave the private rental sector. High rental prices, which according to LSL Property Services have increased 2.7% in the year to March, compared to a fall of 0.2% in house prices, mean it still makes great sense to take advantage of favourable mortgage rates and get a foot on the ladder. The problem is that next month’s gross lending figures are likely to reflect the fact that putting together a large enough deposit has become substantially harder,’ he added.
David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains, believes that the CML figures are a reflection of the profound impact fiscal policy has on the property market. ‘A flurry of first time buyer activity in the run up to the end of the stamp duty holiday has caused a temporary spike in lending. Our house price index indicates a 32% increase in transactions in March and the number of first timers leaving the private sector over the last two months has caused a pause in the growth of rental prices, which have fallen by almost 1% since January,’ he pointed out.
‘While it’s encouraging to see there are substantial numbers of buyers out there looking to make a purchase, what are now higher barriers to entry for first-timers mean we’re likely to see a reversal in the next few months. Those who haven’t been able to move quickly enough to beat the taxman will be forced to save even larger deposits while occupying property in the private sector. This is likely to mean April’s figures will show a substantial month on month fall in mortgage lending and a return to rising rents in most parts of the UK,’ he added.
