Mortgage lending subdued in the year to April 2019

Home lending remains subdued in the UK with the latest industry figures showing that gross mortgage lending fell in April compared with a year ago.

The data from UK Finance shows that residential lending in April 2019 was £20.3 billion, some 1.4% lower than April 2018.

According to the industry the continued uncertainty surrounding Brexit is affecting the property market as a whole and this is reflected in lending. John Goodall, chief executive officer of Landbay, pointed out that it is also affecting lenders’ plans.

‘Mortgage lending remains subdued, and reflects the wider challenges facing the market. Lenders are having to push down mortgage rates for customers even as funding costs begin to rise, which has led to banks like Tesco bowing out of the market altogether,’ he said.

‘Prices have started to stabilise but until we have some clarity on the current political situation we’re unlikely to see a drastic rise in confidence, and subsequently lending,’ he added.

Dilpreet Bhagrath, mortgage expert at online mortgage broker Trussle, believes that the decrease in gross mortgage lending across the residential market could come as a result of subdued growth in house pricing this year.

‘But, with remortgage approvals 2.2% higher, it’s really promising to see that homeowners are still engaging with their mortgage. However, there are still around two million homeowners sitting on Standard Variable Rate mortgages, collectively overpaying billions of pounds in additional interest each year,’ Bhagrath explained.

According to Richard Pike, Phoebus Software sales and marketing director, he correlation between the gross mortgage lending figures, which were down, and the number of approvals, which were up across the board, is quite telling.

‘As house prices fall, especially in London and the south east, and house buyers also look farther afield into more affordable areas, this gap is only likely to widen. It is, however, encouraging to see the increase in approvals for home purchase, which does show that people have had enough of sitting on their hands and are making their move,’ he said.

‘The level of unsecured lending has been rising consistently over the last few months. This does give cause for concern as it perhaps shows that there are a great many people living on credit to meet their basic needs. This type of credit is more easily attainable and, without security, does put more vulnerable borrowers as risk,’ he pointed out.

He also pointed out that, as the latest inflation figures went over the 2% target set by the government there have been questions as to whether the Bank of England will consider an interest rate rise.

‘However, it is probably a little early to think that. There are many factors and, given the latest upheaval in Westminster, there is a lot of dust that needs to settle before that particular decision has to be made. So in the meantime, those that have had enough of standing still will benefit from the continued low interest environment,’ he concluded.