Commenting on market conditions in this month's Market Commentary, CML chief economist Bob Pannell observes:
"Our forward estimate is that gross lending in April was £12.1 billion. This would have been 4% up on March. The comparison with April last year - 21% higher - is flattered by the temporary dearth of house buying activity immediately following the closure of the stamp duty concession.
"The true underlying position is that April is likely to have been one of the strongest months for lending activity since late 2008, but not as strong as the year-earlier comparison suggests. Gross lending on a seasonally adjusted basis has been running comfortably above £12 billion for several months, but this is still barely half the average level of lending seen in 2003-4."
Duncan Kreeger, director at peer-to-peer lender West One Loans, comments:
“Far from recuperating, the biggest lenders are still reeling from a crisis that struck over five years ago. Gross mortgage lending in the last twelve months represents only 40% of the 2007 level. But even this meagre flat-lining has only been possible thanks to huge subsidy. Strong comparisons with a year ago only reflect just how dependent the high-street lenders are on government support.
“In particular, business lending is still thoroughly submerged in the crisis, having seen negative growth since 2011. That’s part of the reason why – at £1 million pounds a day – alternative business finance has already outpaced Vince Cable’s latest £300 million pound ‘business bank’ offering by 20% this year. Traditional finance is undergoing a process of disintermediation – a process that could be terminal for certain old ways of doing things, but a trend that could also provide a much more solid foundation for the future of finance.”
Richard Sexton, director of e.surv chartered surveyors, said:
“We’re seeing a refreshed and more flexible mortgage market emerge in 2013, a market that is in a much stronger positions to cater for the dreams of aspiring homeowners. Last month marked the strongest April for gross mortgage lending since 2008. But the biggest marker of success is the range of borrowers that the new mortgage market is now able to reach. One in nine mortgages in April was to high LTV borrowers, 14% higher than last year. Inflation is falling, confidence in the economy is improving, and the FTSE is at a record high. It’s a veritable cocktail of good economic news, and the strongest indication yet that the mortgage market has freed itself from the grip of the financial crisis.
"Banks have widened the goalposts for borrowers. They’ve introduced record-low rates, and a wider range of mortgages. Lenders have grown in confidence, so they are more willing to lend to high LTV borrowers. This has sparked a burst of activity, especially among first-time buyers. And falling inflation will make it easier for prospective buyers to construct a deposit for a mortgage. This should help keep the mortgage market firmly on the road to recovery.”
