A 21% rise from £9.3 billion in February and a 2% decline from £11.5 billion in March 2010, according to data published today by the Council of Mortgage Lenders.
Gross lending for the first quarter of 2011 was therefore an estimated £30.1 billion, an 11% decline from the fourth quarter of 2010 (£33.9 billion) and a 1% increase from £29.7 billion in the first three months of 2010.
CML chief economist, Bob Pannell, said:
"The housing market has emerged hesitantly from hibernation. Household finances are under a lot of pressure, and as a result demand for house purchase loans fell in the first three months of 2011. Lenders expect mortgage credit availability to improve this quarter, and this should help to underpin house purchase activity albeit at pretty low levels.
"Remortgage demand, meanwhile, continues to firm, presumably linked to expectations of higher base rates. Remortgage approvals in February were the highest for more than two years. Stronger remortgage activity looks set to continue propping up overall lending."
Jonathan Samuels, CEO of Dragonfly Property Finance, said:
"Mortgage lending may be up in March but it's still down in historical terms. We certainly don't see this as the beginning of a trend given current conditions. For the rest of the year and on into 2012 the mainstream mortgage market, and house prices generally, will continue to flatline.
"Consumers are worried about their jobs and the direction of interest rates, which will affect their already stretched finances, and so are putting the biggest financial commitment of their lives on hold. High street lenders, meanwhile, are still in hiding and are only opening their arms to flawless, equity-rich applicants.
"Unfortunately, two negatives, in the mortgage world, do not make a positive. It could be two to three years before the mainstream mortgage market finally gets back on track. The recession is over but it doesn't feel like it's over and that's what is restricting demand.
"The fact that sellers, in many cases, are demanding highly unrealistic prices for their properties is also reducing the appetite of prospective buyers. While borrowing at higher LTVs remains flat, constrained by consumer caution and the stringent criteria of lenders, at lower LTVs and among cash buyers there is still considerable activity.
"It's this activity that is supporting prices at the higher end of the property market, especially in London and select other prime areas of the country."
Brian Murphy, head of lending at independent mortgage brokers Mortgage Advice Bureau, said:
"The latest Gross Mortgage Lending figures are surprisingly positive and reflect what we're seeing in the market, with remortgage activity particularly buoyant at the moment as homeowners continue to take advantage of the favourable interest rate environment.
"However, it's important not to get too far ahead of ourselves. The level of mortgage activity in March is still down on 12 months ago, and it's far too soon to talk optimistically about a housing market recovery when buyers are still suffering from a serious lack of confidence.
"It is also worth bearing in mind that although March has been a good month for mortgage activity, there is every chance that April, despite the glorious weather, could be a total washout, with Royal Wedding fever sweeping the country and people taking advantage of two bank holiday weekends to go away.
"How the market bounces back in May, following a predicted April lull, could very much determine how the mortgage market performs for the rest of the year."
John Mawdsley, chief executive officer of Omnii Solutions, says:
“Make no mistake, the long-term rehabilitation of the market is still some way off. The strong month on month rise is a pyrrhic victory, set as it is against the 2% decline year on year. The 21% increase might look great compared to February - but February was a dire month in its own right.
Nonetheless, this news will still be well received by brokers. It follows the latest e.surv Mortgage Monitor which showed the average LTV is at its highest point for three years. More first time buyers got into the market in March as lenders put higher LTV products on the market, and in greater volumes.
Brokers should be encouraged that borrowers and lenders alike have shown great resilience - despite the bad news that has shrouded the economy in recent months.”
Paul Hunt, managing director of Phoebus Software said:
“On the face of it, a 21% rise in gross lending sounds like exciting news for the champagne industry. But anyone who pops a cork in celebration will be left feeling flat. Mortgage lending is still very slow.
"The seasonally adjusted rise in lending looks much more modest and it’s worth remembering gross lending hit its second lowest point in 10 years last month. This is the second lowest level of March lending activity this decade and when public sector cuts begin to significantly boost unemployment, we could see lenders get even more nervous about borrowers’ financial security.
"It’s going to be some time before the economic horizon looks cloud-free and until then, prospective borrowers will continue to be left frustrated by tight lending criteria and limited mortgage finance.”
Peter Rollings, CEO of estate agent Marsh & Parsons, said:
“The green shoots of a seasonal recovery in lending are emerging, but let’s not be fooled into thinking the market is blossoming. Even with the str
