The latest estimates put gross mortgage lending at £25.7 billion in March, which is the highest figure recorded since 2007, and the result of a buy to let surge to beat the Chancellor’s new stamp duty surcharge on second homes.
The Council of Mortgage Lenders (CML) has reported that lending was 43% higher than in February this year (£18 billion) and 59% higher than in March 2015 (£16.2 billion).
March’s total is also the highest figure since 2007, when gross lending hit £30.9 billion.
For the first quarter of this year, the CML therefore estimates gross mortgage lending to be £62.1 billion.
While this is the same level as in the previous quarter, it is 39% higher than the first three months of 2015.
Mohammad Jamei, CML economist, said:
“Against a backdrop of a recovering market, the substantial jump in lending in March was significantly influenced by a late surge of activity to beat the government’s stamp duty change on second properties, which came into effect at the start of April. The distortion caused by this stamp duty change appears to be larger than any previous stamp duty change we’ve seen.
“As a result, we expect there will be about 10,000 fewer mortgaged transactions each month in the second quarter of 2016 than would otherwise have been the case, offsetting the increase in activity seen in March.”
John Eastgate, sales and marketing director of OneSavings Bank, said:
“Driven by the changes to Stamp Duty that kicked in from April, the mortgage market was firing on all cylinders in March as landlords, brokers and lenders shifted into top gear to complete on purchases. It is important to note that whilst landlords will have been the driving force for growth, the new rules also captured many different types of purchaser.
Whatever the cause, the effects of the Stamp Duty changes saw lenders, brokers and conveyancers burning the midnight oil to keep borrowers happy and this was reflected in mortgage activity.
“Whether the spike is a one off phenomenon or not, the fundamentals of the market remain strong. The benign outlook for interest rates is supporting activity, while buyer finances are being bolstered by a strong labour market.”