Weak lending in April, but signs of recovery

The latest figures released by the Bank of England show total mortgage lending in April was £15.8bn – down a little from the £16.1bn we saw in March, and around 5% lower than April last year.

£10bn of that lending was for house purchase which again was lower than March and shows an even bigger drop – over 7% - compared to last year.

This bears out the broader, puzzling, pattern of 2015 so far. Mortgage lending for homebuyers in the first 3 months of the year was the lowest quarterly figure since Q2 2013, as indeed was lending overall. While the first quarter is normally the weakest in a year (not least since it’s the end point of lower activity in the run-up to Christmas) the annual decline wasn’t anticipated, and is hard to explain.

The mortgage market feels much better than those numbers suggest: confidence is probably the best it’s been since the credit crunch; house prices broadly seem to be holding up or growing gently; lenders continue to improve their offering and new record-low rates are launched seemingly every week. On top of that we are awash with government initiatives to help homebuyers.

Yet somehow this doesn’t seem to be feeding through into increased lending.

But every cloud has a silver lining. The subdued figures are almost certainly responsible for lenders continuing to slash interest rates (the current rate-war has been going since last October) and a mortgage lender desperate for business usually spells good things for prospective borrowers.

There is some hope in the approval (mortgage offer) figures. While Q1 overall was no less disappointing (the lowest quarterly approvals in two years) that disguised a significant improvement in March, and April was higher again.

Perhaps the corner has been turned.

Guild Mortgage Service, Provided by London & Country Mortgages

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