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Mortgage lending dropped 8% in February

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While overall lending dipped, first-time buyer and remortgage business remains strong
Mortgage lending dropped 8% in February

Mortgage lending fell to an estimated £18.2bn in February, according to lender trade body, the Council of Mortgage Lenders.

This is 8% lower than January’s lending total of £19.8bn, and closely matches the £18.1bn lent in February last year.

CML senior economist Mohammad Jamei said: “Mortgage lending is holding up well, but under the surface buyers face mixed fortunes. First-time buyers and customers who are remortgaging are driving total lending, while home movers and buy-to-let remain weak.

“The weakness in home movers means few properties are coming onto the market for sale, which is aggravating a supply demand imbalance that has characterised the market since late 2013. This looks set to continue at least over the next few months, posing an obstacle for would-be borrowers.”

Seasonal dip?

Henry Woodcock, principal mortgage consultant at IRESS, noted that the month of February normally sees a decrease in lending compared to January. He added: “Even though we’ve seen a decrease in lending from January, first-time buyer activity, supported by government schemes has still been strong, as has growth in remortgaging. Overall, average house prices are expected to grow modestly this year, however we’re likely to see significant regional variance. Growth will most likely be outside the cooling capital market and more in regional centres such as Birmingham and Manchester.

“There was no stimulus to housing provided in the Spring Budget, and forecasts by estate agents indicate that the number of home transactions completed will fall by 11% this year. However, I still expect March gross lending to be slightly higher than February, although it will not reach the heady height of 2016 which was driven to a great extent by impending buy-to-let changes.”

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