Mortgage lending is in “neutral gear” and unlikely to change as a result of the General Election, according to the Council of Mortgage Lenders.
The CML said that monthly mortgage lending rose 19% in March to £21.4 billion.
This figure is 19% lower than the £26.3 billion lent in March last year, when borrowers rushed to beat April’s stamp duty deadline.
Last year, the government increased stamp duty on second homes by 3% as part of its plans to curb the buy-to-let market.
Since the crackdown, the buy-to-let market has taken a substantial hit, allowing more first-time buyers to get on the property ladder.
The CML said that lending growth continues to be driven by remortgage activity and first-time buyers, as buy-to-let and home mover numbers struggle to grow.
The number of first-time buyers in the past year was 342,000, higher than for any period over the last nine years.
Mohammad Jamei, CML senior economist, said: “Mortgage lending appears to be in neutral gear. Our gross estimate for March is £21.4 billion and this is broadly in line with average monthly lending over the past year. Within this aggregate level, there has been a shift towards first-time buyer and remortgage customers, away from home movers and buy-to-let landlords.
“We expect this profile to continue over the short-term, as low mortgage rates encourage existing borrowers to remortgage and government schemes help first-time buyers. We do not expect any marked effect from the General Election.”
However, Henry Woodcock, principal mortgage consultant at IRESS, warned that the outlook for gross lending does not “look rosy”.
“In addition to the snap general election announcement, which may result in people delaying significant financial commitments in the short term, there are also a few other factors at play that might dampen mortgage activity.
“Although unemployment remains low at under 5%, inflation is starting to eat into wage growth and is above the government’s 2% inflation target. The recent Royal Institution of Chartered Surveyors (Rics) monthly survey shows that stock levels are at a new record low and the number of people interested in buying a property – and the number of sales – were also ‘stagnant’ in March.
“With the prospect of a rise in the Bank of England base rate, consumers may decide to delay buying that new home or changing mortgages until the economic picture is clearer.”
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