Gross mortgage lending in the UK reached £20.2 billion in December 2017, up 1.2% year on year, helped by a rise in first time buyers, the latest data shows.
According to industry experts the estimated growth from UK Finance was unexpected as December is traditionally a quieter month for home lending.
Eric Leenders, managing director of personal finance at UK Finance, said that the underlying trend shows a rise in first time buyers supported by Government initiatives such as the Help to Buy schemes.
He also pointed out that despite an interest rate rise of 0.25%, mortgage rates remain low, driven by a lot of competition and home buyers can benefit by shopping around.
The December rise is welcomed by the industry, according to Henry Woodcock, principal mortgage consultant at IRESS as mortgage approvals had been declining through the last quarter of 2017.
He pointed out that although approvals edged up to just over 65,000 in November, that was still 3,000 fewer than in November 2016. However, January usually sees a significant rise in approvals.
‘Industry sentiment among lenders and mortgage brokers is positive, with UK Finance forecasting a moderate increase in housing transactions and gross lending,’ he said.
He also explained that the interim report of the Financial Conduct Authority study into competition in the mortgage market is due in the first quarter of 2018 and it will be interesting to see if that has any influence on the market during the rest of the year.
‘I don’t expect a bumper year for gross mortgage lending. The December RICS residential survey saw buyer interest edging lower and they are predicting a relatively flat 2018,’ he added.
People are clearly still eager to take advantage of historically low mortgage rates, and good loan to value deals, according to John Goodall, chief executive officer of buy to let specialist Landbay, enabling them to lock into the security of fixed rate products in the face of a gradually rising base rate.
‘The stamp duty cut for first time buyers has brought new buyers into the market, and as far as buy to let mortgages go, we’ve already seen significantly more demand than at this point last year. There’s also a raft of two year fixed deals about to reach maturity following the refinancing rush ahead of stamp duty changes in 2016, so there could still be more growth on the horizon,’ he added.