It will be regarded as good news for the property industry as there have been concerns that lending was following despite high profile initiatives announced by the government aimed at increasing lending, especially to first time buyers.
Even although the monthly figure is higher, lending at £10.6 billion is still 8% lower than March 2012 when it was £12.6 billion. However, this was just before the first time buyer stamp duty holiday expired, distorting meaningful comparison.
Gross lending for the first quarter of 2013 is an estimated £33.8 billion, a 9% drop from the last three months of 2012 but matches the gross mortgage lending total for the first quarter of 2012.
‘Conditions in the housing and mortgage markets continue to show signs of improving. The improvement in funding markets over the past year, reinforced by the incremental benefits of the Funding for Lending Scheme, has been the key catalyst behind stronger housing activity,’ said CML chief economist Bob Pannell.
‘The Help to Buy mortgage guarantee scheme, while still embryonic as yet, holds significant firepower, and has the potential to increase activity from 2014,’ he added.
Richard Sexton, director of e.surv chartered surveyors, believes that the mortgage market is moving on. ‘Even though the economy is in a state of rigor mortis, rates are lower, choice is wider and first time buyer lending is improving. Borrowers with smaller deposits are having more joy, and are accounting for a bigger proportion of total lending than they did six months ago,’ he said.
But he also believes that the 9% increase is rather misleading and exaggerates the health of the market, particularly the first time buyer market. ‘A large chunk of lending in March was for remortgaging, particularly by landlords who are trying to manufacture enough money to make further additions to their portfolios. Criteria for new buyers are still tight, and borrowers have to cross a high threshold to access the more affordable mortgages,’ he explained.
‘Inflation and weak wage growth have pillaged personal finances, and leached away money that could be used for a deposit. Potential buyers are trapped in a vicious circle of high rental costs, escalating living costs and rock bottom savings rates,’ he added.
Duncan Kreeger, director at peer to peer lender West One Loans, said that mainstream lending is still failing the UK economy and slow progress in March from a miserable February hasn’t changed that.
‘For any kind of progress, traditional lenders are increasingly dependent on hand outs and one offs. The unflattering comparison with last year makes that sad dependency clear. But high street lending isn’t just weak compared to a year ago, it’s down 3% from the latest 12 month average too,’ he pointed out.
‘Subsidies like Funding for Lending favour the biggest beasts, and the bureaucratic nature of a paralysed and over regulated high street is propping up the old world of finance. That’s why private finance and peer to peer lenders are outflanking and outpacing the dustier old banks. Our latest Broker Sentiment Survey makes this crystal clear, with a record number of investors using alternative finance to fill the chasm like shortage of rental properties,’ he added.
