The Council of Mortgage Lenders (CML) has revealed that gross mortgage lending fell by 8% during February.

Data showed that last month’s lending total was £18.2bn, which represented an 8% decline on the £19.8bn recorded for January. 

However, the figure for last month closely matched February 2016’s total mortgage lending figure of £18.1bn.

Mohammad Jamei, senior economist at the CML, felt that mortgage lending was holding up well, but felt that below the surface buyers were facing mixed fortunes.

“First-time buyers and customers who are remortgaging are driving total lending, while home movers and buy-to-let remain weak.

“The weakness in home movers means few properties are coming on to the market for sale, which is aggravating a supply-demand imbalance that has characterised the market since late 2013. 

“This looks set to continue, at least over the next few months, posing an obstacle for would-be borrowers.”

'I still expect March gross lending to be slightly higher'

Henry Woodcock, principal mortgage consultant at IRESS, said February usually saw a decrease in lending compared to January.

“…I still expect March gross lending to be slightly higher than February, although it will not reach the heady heights of 2016, which was driven to a great extent by impending buy-to-let changes.”

Nevertheless, Henry did feel that the recent jump in CPI inflation could put some pressure on the Bank of England’s Monetary Policy Committee to start considering an interest rate rise, which in turn could impact the mortgage market.

“If that was to happen, it would obviously mean higher monthly payments for people on tracker and variable mortgages, and lenders would react quickly to pull some of the very cheap mortgage deals. 

“With this mood music playing, it wouldn’t surprise me if we see an unusually higher spike in mortgage activity over the coming months as people look to bag the best deals while they’re still available.”

Jeremy Duncombe, director at Legal & General Mortgage Club, felt that the fall in mortgage lending wasn’t the major concern for the housing market.

“…It is no immediate cause for concern and shouldn’t distract from the bigger picture – which is that transaction volumes are an issue, stamp duty is deterring movers and supply is limited.

“The recent housing white paper gave some direction in terms of how [the] government plans to start tackling our nation’s chronic shortage of affordable homes. 

“However, there are huge challenges facing … government, industry and local authorities which must be overcome before we can see a welcome return to a healthy and stable housing market."

Remortgage activtiy to drive lending levels in 2017

John Eastgate, sales and marketing director of OneSavings Bank, felt that some moderation was to be expected with regards to mortgage lending and welcomed the drop.

“While buy-to-let purchases have seen a dip since the changes to stamp duty costs last year, the sector has also seen a surge in demand from landlords refinancing to take advantage of low rates to reduce their costs. 

“We should expect to see remortgage activity continue to drive lending levels in 2017 as a lack of supply and stretched affordability will continue to subdue the purchase market.”

Looking ahead to the next set of lending figures to be released, Jeremy Leaf, former RICS residential chairman, added: “…The spring market is already showing signs of some improvement from the rather dull conditions prevailing in the first few months of the year, but once again it is only those buyers and sellers who are prepared to be realistic who are making transactions happen.”

Mark Harris, chief executive of SPF Private Clients, concluded by adding: “Swap rates have edged upwards on the back of rising inflation and a split in the Monetary Policy Committee at the last meeting. 

“However, uncertainty over Brexit suggests interest rates are unlikely to rise anytime soon, at least until we have a better idea of what a post-Brexit world would look like. 

“Mortgage rates continue to look competitive and there is plenty to tempt those remortgaging, as well as first-time buyers, with some good deals available at high loan-to-values.”