Cheap borrowing levels should boost demand for property across the UK in the coming months, despite a recent fall in the number of mortgage approvals for house purchases, according to various experts.
Gross mortgage lending was £18.4bn in April, down 11% on March, according to the latest data released by the Council of Mortgage Lenders (CML) yesterday.
But despite the drop in lending figures, various housing market analysts forecast that low mortgage rates will encourage more people to borrow money to buy property, especially first-time buyers and existing homeowners looking to remortgage.
“Although we’ve seen a slight dip in mortgage lending levels, the housing market seems to be enjoying a return in buyer confidence,” said Jeff Knight, marketing director at Foundation Home Loans. “First-time buyers and remortaging activity continued to drive lending volumes throughout April, as low interest rates have, and will continue to, support demand.”
John Eastgate at OneSavings Bank was not surprised to see a dip in lending levels, given the recent increase in inflation, but he also expects to see market conditions improve.
“This [the fall in mortgage activity in April] is likely to be only temporary and I don’t see any long term trend being established by these figures,” he said. “Inflationary pressures will pass and low rates will continue, and the mortgage market will remain robust.”
John Goodall, CEO and co-founder of buy-to-let specialist Landbay, said that there was no hiding the fact that mortgage lending activity “faced a rocky period” in April, despite a number of record low mortgage rates and loan-to-value deals. But with cheap finance helping many first-time buyers to step on the ladder, and encouraging homeowners to remortgage, he also believes that the recent fall in activity “is likely to be a blip”.