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Confidence high but mortgage lending trends down in Q1

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  • 17/04/2014
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Confidence high but mortgage lending trends down in Q1
March lending nudged up 4% in February, but Council of Mortgage Lenders figures out today suggest Q1 this year is 10% down on the last three months of 2013.

Gross mortgage lending was an estimated £15.4bn in March, according to the Council of Mortgage Lenders, 4% higher than February’s total.

However, the incoming Mortgage Market Review (MMR) could either be putting a brake on what was previously a flying market or the heat appears to be coming off its high at the end of last year.

Mortgage borrowing is still 33% up on March 2013, but this comparison is before the effects of Help To Buy 2 moved the market up to a higher gear at the end of last year.

CML chief economist Bob Pannell said housing sentiment continues to strengthen and that he sees no signs of market disruption.

However, Simon Crone, vice-president mortgage insurance Europe at mortgage insurer Genworth, said: “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.”

In a warning for first-time buyers, he added: “For first-time buyers looking for mortgages in the next few months the market may not be as 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.”

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