Mortgage lending growth flat in April, outlook for 2014 uncertain

Gross mortgage lending was up by five per cent in April, partly as a result of an increase in remortgage activity, according to data from the Council of Mortgage Lenders.

There were 42,600 mortgage advances for house purchases in April, down 0.9 per cent month-on-month. First-time buyers, meanwhile, took out 19,400 loans, down one per cent month-on-month. Year-on-year data has been distorted by the rush of buyers at the end of stamp duty concession, with the number of loans up a respective 22.4 per cent and 57.7 per cent overall and for first-time buyers.

Meanwhile, the number of remortgage loans grew by 7.1 per cent month-on-month to 25,600.

Commenting, Howard Archer of HIS Global Insight said,

We believe house prices are highly likely to trend up moderately over the rest of 2013 as activity picks up. However, a decisive upward move in house prices seems unlikely in the near term at least given a still challenging and uncertain economic environment despite the recent signs of improvement in activity.

Confidence in the housing market has also been fuelled by government initiatives like Help to Buy, which pushed demand and prices to a three-year high last month, according to data from the Royal Institution of Chartered Surveyors.

Help to Buy, introduced in this year’s budget, will begin issuing mortgage guarantees in 2014, but its success is mired in conditionalities. The IMF last month said of the mortgage underwriting element of the scheme,

There is a risk that, in the absence of an adequate supply response, the result would ultimately be mostly house price increases that would work against the aim of boosting access to housing.

Commenting in City AM, poverty research fellow at the Institute of Economic Affairs Kristian Niemietz argues that relaxation of planning laws could help address this supply problem.

Kristian Niemietz is poverty research fellow at the Institute of Economic Affairs - See more at: http://www.cityam.com/article/help-buy-issues-won-t-be-solved-taxing-speculators#sthash.iFk5YmEZ.dpuf

there is a risk that, in the absence of an adequate supply response, the result would ultimately be mostly house price increases that would work against the aim of boosting access to housing - See more at: http://www.cityam.com/article/help-buy-issues-won-t-be-solved-taxing-speculators#sthash.iFk5YmEZ.dpuf