Mortgage lending surged to £25.7bn in March
Mortgage lending in March rose to a massive £25.7bn, according to the Council of Mortgage Lenders – the highest March figure since 2007.
This lending boom was fuelled by buyers racing to beat the second property Stamp Duty surcharge deadline, including buy-to-let investors.
Lending was 43% higher than in February (£18bn), and a huge 59% higher than March 2015 (£16.2bn), taking the total for the first quarter of 2016 to £62.1bn, a significant 40% higher than the same time last year.
However, CML economist Mohammad Jamei warned that lending could now fall following the spike last month. He said: “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 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.”
Henry Woodcock, mortgage consultant at IRESS, added that the EU Referendum could also dampen lending in the coming months: “There are a few factors I think will have a levelling-off effect on gross mortgage lending. The looming EU referendum may mean borrowers will wait and see the result before proceeding.
“The newly introduced Stamp Duty land tax surcharge, targeted at prospective private landlords and the Bank of England’s proposed new tighter lending rules to make it harder for landlords to get a mortgage, is bound to have a dampening effect on the buy-to-let market. Lastly, while remortgaging appears to be on the rise, I’d caution that increases may be limited for many interest only borrowers, as lenders now require credible repayment vehicles to be in place first.”