CML figures released this week show a 30% increase in gross mortgage lending in March. The estimated gross mortgage lending figure is £13.4 billion, up from £10.3 billion in February. This also represents a 17% rise from March 2011.
The first quarter of the year saw gross lending of an estimated £34.4 billion. This is a slight fall from Q4 of 2011(£37.8 billion) but a 13% increase on year-on-year figures (£30.3 billion).
Bob Pannell, CML chief economist commented that:
The underlying picture for house purchase activity has been relatively buoyant in recent months. But it is not entirely clear what has powered this, especially at a time when household finances and confidence have remained fragile. There has not been much change in first-time buyers’ share of house purchase activity, suggesting that — prior to March – the stamp duty concession for first-time buyers had not been a major factor. We have seen buy to let landlords buying more, and while there are few signs that this is set to reverse, it only accounts for a relatively small proportion (no more than 10%) of overall property sales.”
The CML expects that in the short term there will be a dip in transactions, following from the end of the stamp duty holiday. It is suggested by Bank of England figures already support this, with its weakest figure of house purchase approvals since mid 2011.
David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains said:
“These figures are a reflection of the profound impact fiscal policy has on the property market. A flurry of first-time buyer activity in the run up to the end of the stamp duty holiday has caused a temporary spike in lending. Our house price index indicates a 32% increase in transactions in March and the number of first-timers leaving the private sector over the last two months has caused a pause in the growth of rental prices, which have fallen by almost 1% since January. While it’s encouraging to see there are substantial numbers of buyers out there looking to make a purchase, what are now higher barriers to entry for first-timers mean we’re likely to see a reversal in the next few months. Those who haven’t been able to move quickly enough to beat the taxman will be forced to save even larger deposits while occupying property in the private sector. This is likely to mean April’s figures will show a substantial month-on-month fall in mortgage lending and a return to rising rents in most parts of the UK”.
It will be interesting to see next month’s figures to see how much of an effect the stamp duty holiday has had on first time buyers.
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