This is 5% higher than September (£18 billion), and 8% higher than October last year (£17.5 billion). This is the highest lending total for an October since 2008 (£18.6 billion).
CML Economist Mohammad Jamei observes:
"The market is in a steadier state than it was earlier in the year. As the temporary impact of implementing the mortgage market review fades, a clearer picture of the mortgage and housing market is emerging. Nearly all indicators in the housing market align with our view of a gentle easing in market conditions.
"While the housing market has cooled in recent months, mortgage lending continues to be underpinned by positive factors. With expectations of the first interest rate rise moving to the fourth quarter of next year, as well as positive forecasts for growth, pay and unemployment, there is potential for market activity to gain traction in the new year."
Jonathan Harris, director of mortgage broker Anderson Harris, said:
"Gross mortgage lending totalled £19 billion in October, higher than September's £18bn. However, the annual growth rate of 8 per cent is rather lower than the 40 per cent year-on-year jump seen in January. It makes for a more sustainable and healthy market, free from boom and bust.
"With the Bank of England suggesting that the first interest rate rise won't be until the end of next year, at the earliest, this will boost activity in the mortgage market. Many lenders are cutting their rates in an effort to generate more business, particularly as the introduction of the mortgage market review slowed things down earlier this year. There are some great mortgage offers around for those buying or remortgaging, and this will continue well into next year.
"All we need now is for lenders to come up with innovative products that will solve some of the issues created by MMR. In particular, something directed at older borrowers who are struggling to get a mortgage, remortgage or even guarantee a child's mortgage because of their age."
Henry Woodcock, Principle Mortgage Consultant, IRESS, said:
“Talk of a prolonged slowdown in the mortgage market is premature. Demand from house buyers and re-mortgagors is still strong, and this is being matched by the availability of finance.
"Lenders are looking towards their full year targets, heating up competition and bringing down mortgage rates. In turn, this will stimulate demand further.
"Yes, lenders are still adjusting to the MMR, although this is still is a decreasing factor. Yes, uncertainty over interest rates is resulting in more caution from many prospective buyers. But the long-term picture looks positive.
"The labour market is continuing to improve, while leverage ratio rules were not as severe as first thought, which could buoy mortgage lending.”
Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments:
“The monthly rise in lending for October shows there’s plenty of life left in the market following the Mortgage Market Review (MMR). Successive falls in the two previous months were most likely a delayed effect as applications slowed during the switchover. But the signs are that activity is back up and running, with lenders firing on all cylinders to record the second highest monthly lending total of the year.
“Anyone currently looking for a mortgage is in the fortunate position of having a choice of low rate products and the reassurance that affordability checks will ensure their finances can stand up to future rate rises. The 0.5% base rate continues to live a charmed existence, and while policy makers are caught up in a game of cat and mouse over the timing of the first rise, there is every chance that product pricing has further to fall – making the outlook even better for borrowers.
“The market has been fundamentally reshaped under MMR and the return to growth has meant an especially busy time for brokers, who are increasingly in demand for advice on an unprecedented number of products.* Lenders are becoming more reliant on intermediaries to manage demand in a cost effective way and help match suitable customers to the right offers.”
