New figures reveal that the estimated total gross lending figure for 2016 was £246 billion – a 12% increase on 2015’s £220 billion and the highest annual gross lending figure since 2008.
The Council of Mortgage Lenders’ (CML) latest estimates show that gross mortgage lending reached £20.4 billion in December, a 4% drop on November’s £21.2 billion but a 4% rise on the £19.7 billion recorded in December 2015.
The CML has therefore estimated that gross mortgage lending for the fourth quarter of 2016 was £62 billion. This represents a 3% decrease on the third quarter but is in parallel with the lending figure of £61.8 billion from the fourth quarter of 2015.
Mohammed Jamei, senior economist, CML commented: “The UK housing market, much like the wider UK economy, ended 2016 on a generally positive note.
“Approvals for house purchase have recovered strongly of late, and this should feed through to lending figures in the early months of 2017. The current availability of mortgage credit is benign, and the real issue continues to be a dearth of properties on the market, which adds to the challenges facing would-be buyers.
“Uncertainty associated with political factors and prospective changes to the tax treatment of landlords will weigh on prospects for the year ahead.”
Steve Olejnik, Chief Operating Officer of Mortgages for Business comments:
“Buy to let lending is likely to have dipped in December, and we estimate that 2016’s total level of gross buy to let lending will stand at around £40bn. This would put the sector’s share of lending at around 16% of 2016’s total, down from around 18% a year earlier, which is a realisation of policymakers’ plans to level the playing field between first time buyers and landlords.
“Buy to let’s share will reduce further, and we believe that 15% is a healthy and sustainable level for the sector. Lending to landlords via limited companies will increase however, as landlords seek to increase their portfolio’s tax efficiency, and our most recent index showed limited company purchase applications increased to 69% of all applications in Q4 2016.
“The BBA’s figures show that the remortgage market performed well in 2016, with approvals 15% higher than in 2015. Landlords have increasingly sought to remortgage, with many taking advantage of the well-priced rates available to them.
There has been particularly high demand for 5-year fixes recently, and there are many excellent long-term deals to be found on the marketplace. While the rise in swaps has not yet been reflected in buy to let mortgage rates, rates do look like they could start to creep up, which makes now an excellent time for investors to remortgage. However, fixing for longer is not necessarily the right option for every borrower, and investors should always seek professional advice when looking at a new product.”
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