Despite fears of a post-Brexit housing market slump, monthly gross mortgage lending jumped 7% in August to £22.5 billion, new figures show.
According the Council of Mortgage Lenders, yearly lending rose 15% from £19.5 billion last year – the highest August figure since 2007 when gross lending reached £33.6 billion.
Mohammad Jamei, CML senior economist, said: “Widely voiced fears in recent months about the housing market have proved to be wide of the mark. Prospects for house purchase activity post-referendum look slightly subdued, when compared to late 2015 and early 2016. However, sentiment in the market recovered in August. This is reflected in stronger-than-expected transaction figures, and in our gross lending estimate.”
Recently published economic data has suggested that the prophecies of doom and gloom from the Remain camp have failed to materialise, although many economists still believe the economy is heading for a sharp slowdown.
“This recovery in sentiment is likely to be down to a number of different factors, including the Bank of England’s monetary stimulus and its introduction of the Term Funding Scheme in August. A subsequent uptick in approvals is anticipated, albeit still at levels lower than earlier this year as affordability constraints and lack of properties on the market for sale continue to bear down on borrowers,” said Jamei.
Figures published by the Building Societies Association this week also suggest that confidence has returned to the housing market.
The Building Societies Association’s Property Tracker revealed that 12% more people are likely to buy a property now than they were just before the referendum result.
According to property website Rightmove, the average price of property coming to market in the last month has risen by 0.7% to £306,499. This rebound comes after a fall of 2% seen over the previous two months.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “It is no surprise that the CML figures estimate that lending picked up in August compared with July and the previous year as that is very much what we have been seeing. Much of our business – as much as 70% – is remortgaging as borrowers look for some certainty while taking advantage of record low rates and snap up a cheap fixed deal.
“With speculation that there is another base rate cut to come, mortgages are likely to remain extremely competitive which should tempt further buyers to market, as long as they can find the property they wish to buy.”
Howard Archer, chief UK economist at IHS Global Insight, said housing market activity was likely to be “increasingly pressurized” as prolonged uncertainty following the Brexit vote constrains consumer confidence and hampers economic activity
“With the economy currently showing resilience following June’s Brexit vote, we expect house prices to be essentially flat over the final months of 2016. We believe that a slight dip in house prices is likely in 2017, possibly by around 3%,” he said.
Loading ...