The Inside Edge
While the underlying trend for the housing market is one of uncertainty, the Council of Mortgage Lenders (CML) have suggested this week that there are some positive signs as property experts search for the merest hint of a potential recovery.
The claims come as the CML confirm that gross mortgage lending for February stood at £10.7bn and while this was virtually unchanged from the previous month’s figures, it still represented an increase of some 14% from this time last year.
This was the seventh time in a row that month on month lending had increased compared to 2011 and CML’s chief economist Bob Pannell was positive about the findings.
“Property sales remain fundamentally weak, but have shown strong year-on-year increases since the closing months of 2011,” said Mr Pannell.
“Allowing for the seasonal factors that depress activity over the winter months, the underlying picture for house purchase activity continues to show some buoyancy.”
Economists have been quick to point out that the February figures are still some way below those of last summer but this is a view that underestimates the power of the weather as a factor in buying activity. Seasonal increases have been shown year after year as buyers begin to stir as soon as summer starts to roll in.
A further reason for the fact that lending is increasing in 2012 seems to be the Stamp Duty holiday which is getting the credit for much of the figures currently released in the property market. At present, the charge of 1% is waived for property purchases up to £250,000 but that window is due to close in the next few days.
“We expect the number of first-time buyers to drop back after March as would-be buyers adopt a wait and see attitude,” said Mark Harris, of mortgage broker SPF Private Clients.
Mr Harris went on to suggest that despite the CML’s claims of ‘buoyancy’, the overall picture was essentially one of a depressed market that was firmly anchored in a period of uncertainty.
“Weak consumer confidence and a shortage of homes coming to market are set to continue, although we do not expect interest rates to rise for three to five years, which will support the market to an extent. Mortgage rates, however, will continue to rise on the back of higher funding costs,” he added.
Looking at the two sets of quotes it almost seems if the CML are desperately willing them to spark a feeling of positivity with economists. However, Mark Harris’ view is a commonly held one and a further gloomy outlook could be triggered by the imminent closing of the Stamp Duty Holiday.