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February lending up 30% on last year

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A massive £17.6bn was lent in mortgages last month, making it the strongest February for eight years
February lending up 30% on last year

Mortgage lending reached £17.6bn in February, a significantly 30% higher than February last year (£13.6bn), according to the Council of Mortgage Lenders.

Although the figure was down slightly (5%) on last month’s lending total, it represented the highest lending figure for the month of February since 2008, when lending reached £24.1bn.

CML economist Mohammad Jamei said: “This growth rate is in line with what we saw in the closing months of 2015. The recovery is being underpinned by market fundamentals in the UK, as wages grow and unemployment falls, helped by Government schemes and competitive mortgage deals.

“But we think it unlikely that there will be any significant acceleration in lending. While there may be a slight current boost to lending as some transactions seek to complete before the 1 April tax changes in the buy-to-let-sector, this is likely to be followed by a slight fall in activity. Affordability pressures continue to weigh on activity, as does the low number of properties coming on the market, though this has been improving very recently.”

Henry Woodcock, principal mortgage consultant at IRESS, said about today’s figures: “With February marking the seventh year of record low interest rates, competition among mortgage lenders heated up with 2 year fixed rates below 1.7%. Remortgaging figures have strengthened as borrowers who are hedging their bets on continued low rates, take advantage of low mortgage deals. The rush of buy-to-let landlords and those buying a second home, looking to beat George Osborne’s increases in stamp duty, has led to high levels of gross lending in February.”

“Although gross mortgage lending in February was slightly lower than in January, I think we’ll see an upward trend in March, but lending may dip in the second quarter as effects of stamp duty changes and the introduction of the mortgage credit directive come into play. Market jitters as the EU vote comes into view may also affect lending.”

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