New Figures Show Mortgage Lending Growth

Figures released this week show that mortgage lending grew in November 2011 and while the news tends to contradict some of the gloomy forecasts for the 2012 property market, it is being met with considerable and predictable caution.

The figures from the Council of Mortgage Lenders show that lending rose by 4% from the previous month with the number of loans made increasing to 47,000. This also represented a rise of 3% on the figures from November 2010.

The CML welcomed the news amidst claims that mortgage lending restrictions were going to increase but figures are still running at around half of the levels experienced prior to the banking crisis of 2007.

“A rise in mortgage lending towards the end of 2011 is a welcome indicator for the industry considering confidence has been weak due to fragile economies both at home and in the Eurozone,” said the CML’s director general Paul Smee.

Smee goes on to say that he expects further rises from now until March when the government’s stamp duty exemption ends. Up until then, buyers will not have to pay the 1% charge on properties costing less than £250,000.

“We should expect a further increase in first-time buyer activity over the next few months as they push through their purchases to take advantage of the stamp duty concession before it ends in March,” Smee added.

Does that mean however that the mortgage lending figures are in any way artificial? The CML went on to add that of the 47,000 home loans for that month, 17,300 were taken out by first time buyers which represented an increase of around 4% from the previous month. Of that figure, it’s not been confirmed how many would have been for house purchases under £250,000 but it’s likely to have been a significant proportion.

The Council did confirm that lending to first time buyers had been steady since 2007 with them contributing to between 34% and 40% of overall purchases. That would suggest that with a constant level of first time buyers, mortgage lending figures aren’t necessarily over-inflated but a further spokesman for the CML warned of a slump once the stamp duty concession ends.

“If we look back at the figures from last year, first-time buyer activity tumbled in the first couple of months of the year. That is likely to happen after the Stamp Duty relief ends in March,” the spokesman concluded.