Gross mortgage lending hit £20.1 billion in May, according to new estimates from the Council of Mortgage Lenders (CML). This equates to a 12% rise on both last month and May 2016, when £17.9 billion was the recorded figure.
Taking into account tax and prudential burdens on the housing and mortgage markets, the CML has reviewed its 2017 and 2018 buy to let forecast, revising the figures down from previous expectations.
Buy to let lending is now predicted to reach £35 billion in 2017 and £33 billion in 2018, falling from the £38 billion previously forecast for each year.
Paul Smee, director general of the CML, said:
“Remortgage activity and first-time buyers continue to drive lending this year. Looking ahead, we expect to see this trend continue, but not as strongly, as the factors supporting lending are blunted by less favourable economic conditions.
“Buy to let had a weak start to 2017, and the sector’s contribution to overall net mortgage lending has fallen considerably over the last year.
“While falling mortgage interest rates have helped support borrowing, tax and prudential measures are exerting pressure on the buy to let market. Following the distortion of the stamp duty change on second properties last year, we expected a slight recovery in lending levels. However, this has not materialised, and we therefore have lowered our forecast for buy to let lending this year and next.
“This re-emphasises the case for avoiding further changes to the tax and regulatory framework until the effect of these already in train have been properly assessed.”
John Goodall, CEO and co-founder of buy-to-let specialist Landbay added:
“Mortgage lending proved resilient in May, as levels rose considerably despite a month of political uncertainty. First-time buyer activity, as well as remortgaging, stayed strong, buoyed by rock bottom mortgage rates which are likely to remain low in the coming months.
“Although overall lending grew, it can’t be ignored that home mover activity is more subdued than in recent times. Rising house prices and hefty stamp duty bills have stumbled the market and sales remain low. It is time that the government addressed these wider issues of the housing market. This includes a re-evaluation of stamp duty charges and some firm promises to tackle the UK’s supply shortage."
John Eastgate, sales and marketing director of OneSavings Bank, said:
“Rapidly rising inflation has been eating into wage growth and consumer confidence is under pressure. However strong employment levels and historically low borrowing costs will continue to support the housing market in the medium term, even if the short term might exhibit some volatility given the political uncertainties that abound.”
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