IMLA comments on rising mortgage activity in the Bank of England money and credit report (Jan 2014)

04 March 2014

Peter Williams, Executive Director of the Intermediary Mortgage Lenders Association (IMLA), comments on the latest Bank of England money and credit report

“The mortgage market is showing ever stronger growth, with the total volume and value of approvals consistently rising for the last three months. January saw 4% more mortgages approved than December, but while activity is increasing, the average amount people are borrowing actually fell by 3%. It suggests the size of mortgage loans remains stable in spite of rising house prices, with households and lenders exercising caution given that the only interest rate changes likely to arise will be upwards.

“Many aspiring buyers are still in vital need of support through affordable loans. The growth of approvals is particularly good news for owner-occupiers, especially with the house buying market growing noticeably faster than remortgages [volumes rose by 13% and 3% respectively between October and January].

“With £18.6bn of lending recorded in the first month of 2014, the market is on course to continue its recovery as IMLA has forecast¹. Regulatory change in April means we may see lending activity impacted, but we can expect a stronger and more rounded market to emerge from the shadows this year, especially with low interest rates preserved for now and Help to Buy 2 getting into gear.

“However, we are still a long way from a full recovery and there is plenty of capacity to support a more expansive and sustainable mortgage market without the continued need for extraordinary support. To get us there, important decisions need to be made and action taken to address the future balance of lending, house building and regulation. With cash playing a stronger role in the market last year than at any other time during or since the recession¹, whether for full purchases or as a deposit, there is much to consider.”

¹ IMLA’s report on mortgage lending in 2014/15 – What is the new ‘normal’ — Mortgage lending in 2014–15 and the march back to a sustainable market – shows:

  • mortgage finance contributed less than 40% of the total value of housing transactions in 2013 while just 62% of transactions were mortgaged – the lowest figures since before the recession
  • the strengthening recovery will see annual mortgage lending reach £215bn in 2014 and £240bn in 2015 – still leaving the market 47% below its 2007 peak in real terms
  • a long term, sustainable recovery is possible beyond 2017, backed by pent-up demand from first time buyers, improving funding markets and the likelihood of low interest rates continuing
  • the full scale of future growth will be impacted by the unwinding of special measures such as Help to Buy and quantitative easing; efforts to address ‘woefully inadequate’ housing supply; and the impact of the new ‘triple lock’ of regulation.

A full copy of the report is available upon request.

For further information please contact:
Andy Lane / Ludo Baynham-Herd, The Wriglesworth Consultancy
Tel: 0207 427 1422 / 29 / Email:

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