The Council of Mortgage Lenders estimates that gross mortgage lending reached £21.4 billion in March - 19% lower than March last year.
The sharp fall in year-on-year lending was expected, as March last year saw significant rises in activity as borrowers rushed to beat the second property stamp duty deadline that came into effect from the beginning of April.
Gross mortgage lending for the first quarter of 2017 was therefore an estimated £59.1 billion. This is a 4% decrease on the fourth quarter of last year and a 6% decrease on the £63.0 billion lent in the first quarter of 2016.
CML senior economist Mohammad Jamei said:
“Mortgage lending appears to be in neutral gear. Our gross estimate for March is £21.4 billion and this is broadly in line with average monthly lending over the past year. Within this aggregate level, there has been a shift towards first-time buyer and remortgage customers, away from home movers and buy-to-let landlords.
“We expect this profile to continue over the short-term, as low mortgage rates encourage existing borrowers to remortgage and government schemes help first-time buyers. We do not expect any marked effect from the General Election.”
Industry responses focused on future constraints, as many predicted further 'complexity' for borrowers - John Eastgate of OneSavings Bank spoke of the 'pressure' in the purchase market as a result of low supply, and IRESS's Henry Woodcook noted that inflation 'is starting to eat into wage growth'.
The general consensus is that governmental measures to increase affordable homes and better quality rental properties were needed, with John Goodall, CEO and co-founder of buy-to-let specialist Landbay commenting:
“Following the recent changes to buy-to-let tax relief and the introduction of tighter underwriting criteria, it is becoming even more complicated for aspiring homeowners and landlords to access the finance they need. What we now need are some firm commitments from the government to tackle the housing crisis. Positive measures aimed at encouraging the development of high quality rented properties will target the lack of supply across both sales and lettings in the housing market.”
Jeremy Duncombe, Director, Legal & General Mortgage Club, added:
“A dip in annual gross mortgage lending reflects a truth that has been well-worn in housing commentary over the last few months: the market is being hamstrung by a severe shortage of affordable homes. Until we address this issue head on, it will continue to exclude many hopeful first time buyers and home movers.
“While our country has experienced numerous political changes recently, with potentially more yet to come, it is important that the Government remains focussed on delivering the promises that were pledged in the Housing White Paper. We need to reconsider our approach to Stamp Duty and Green Belt land, which are both archaic and desperately need re-evaluating. In doing so, these changes will help the Government achieve its ambitious aim of building one million affordable homes by 2020.”