Mortgage lending levels slow to ‘healthy’ level – CML

Mortgage lending slowed in November, and activity has returned to almost the same level as at the end of 2013, banks and building societies reported on Thursday.

The Council of Mortgage Lenders (CML) said gross mortgage lending was 9% down on October’s figure at £16.9bn. This is the lowest figure since April and matches the sum advanced in November 2013.

Lending increased in October but has otherwise been falling since peaking in July, at £19,795. However, the chancellor’s reforms to the stamp duty system, unveiled in December’s autumn statement, are expected to boost activity and house prices in the months ahead.

CML economist Mohammad Jamei said: “House purchase approvals have now fallen for four months in a row. Property transactions are back down to their levels of about a year ago. Coupled with a continuing fall in the annual growth rate of most house price indices, the market appears to be settled.”

He added: “The reform in stamp duty is likely to provide a modest short-term boost in activity over the next few months, but its impact will fade away in the medium term.”

On Tuesday, the CML said it expected mortgage lending to grow in 2015 and 2016, but more slowly than this year. It predicted gross lending of £222bn in 2015 and of £240bn the following year, which would take lending to its highest level since 2008. It forecast net lending would rise to £32bn and £38bn respectively.

Jonathan Harris, director of mortgage broker Anderson Harris, said:”The steady year-on-year picture is rather different from the 40% year-on-year jump in January but makes for a more sustainable and healthy market.”

Harris said the continued low interest rate environment was likely to support activity in the year ahead, but the affordability rules introduced in April under the mortgage market review (MMR) were making it harder for some borrowers to get loans.

“All we need now is for lenders to come up with innovative products that will solve some of the issues created by MMR. In particular, something directed at older borrowers who are struggling to get a mortgage, remortgage or even guarantee a child’s mortgage because of their age,” he said.