Mortgage lending robust but buy-to-let rebound fails to appear
Banks
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17:09 19/04/24
UK mortgage lending remained resilient in May, according to figures released by the industry on Thursday, but forecasts for a revival in buy-to-let lending have proved wrong.
The Council of Mortgage Lenders estimated gross mortgage lending hit £20.1bn in May, up 12% increase on April and 12% on May last year.
The CML, whose banks and building societies stump up around 97% of all residential mortgage lending, revised down its buy-to-let forecast for 2017 and 2018, with the contribution to overall net mortgage lending having fallen considerably over the last year.
BTL lending is now expected to reach £35bn in 2017 and £33bn in 2018, down from £38bn for each year that the organisation forecast at the end of last year.
CML director general Paul Smee said remortgaging 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."
While falling mortgage interest rates have helped support borrowing overall, Smee said the BTL market was being hit by the stamp duty change on second properties last year.
Lenders had expected a slight recovery in lending levels, but Smee admitted "this has not materialised, and we therefore have lowered our forecast for buy-to-let lending this year and next".
Mark Harris at mortgage broker SPF Private Clients said it was no surprise that buy-to-let lending has been subdued in light of the various changes in the industry.
"Landlords are being more cautious when it comes to expanding portfolios while others are considering whether incorporation is the sensible way forward.
With further Prudential Regulation Authority guidelines set to be introduced in October, Harris said not many in sector had yet given much detail on how they would cope with this further challenge.
Henry Woodcock, principal mortgage consultant at IRESS, said: “The market trend over the last two years has been one of monthly increases in gross lending in the month of May compared to April.
"Although 2017 has been unusual with both a snap general election, and the start of Brexit negotiations in earnest, the market continues to show resilience with a month on month increase in gross lending.
He noted that the recent Rightmove’s house price index showed prices held in May with an overall increase of 1.2% and sales remaining strong.