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General Election unlikely to affect mortgage lending

According to the Council of Mortgage Lenders (CML), mortgage lending was down 19% on last year – £21.4 billion, down from £26.3 billion but up from February’s figure of £17.9 billion. The year-on-year fall was largely the result of significant rises in activity in March 2016 as borrowers rushed to beat the additional properties SDLT surcharge.

The CML estimates mortgage lending for Q1 2017 at £59.1 billion, 4% lower than the fourth quarter of last year and 6% below the £63 billion lent in the first quarter of 2016. Average mortgage rates are also at historic lows with a 1.37% two-year fixed rate mortgage at 75% loan-to-value the lowest since records began.

Analysing the data, the CML revealed that lending growth continues to be driven by remortgage activity and first-time buyers, as buy-to-let and home mover numbers struggle to grow. The number of first-time buyer mortgages in the last 12 months reached 342,000, higher than for any period over the last nine years.

Commenting on market conditions, Mohammad Jamei, Senior Economist at the CML, 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.”

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