Mortgage figures 'best for five years' claim is spin, says critic

Friday 15th March 2013

This year started with the best figures for mortgage lending in five years, it has been claimed.

But the rosy picture painted by the Council of Mortgage Lenders is disputed. One critic suggested the figures were spin, saying that mortgage approvals – as opposed to actual advances – were actually down in January.

According to the CML, a total of 38,300 loans were advanced for house purchase in January – the highest for the month since 2008 when 47,800 loans were advanced.

The January performance came despite a marked drop from the month before when 45,900 loans were advanced.

However, it was up 11% compared with January last year when there were 34,600 loans for house purchase.

First-time buyers and home mover activity both rose. However, remortgage lending was 23% lower than the year before, and despite the rise in first-time buyer mortgages, these were still less than half their 2007 level.

There were 15,900 loans for first-time buyers – 18% down from December but 24% up from the previous January, and the largest January total since January 2008, when there were 17,700 first-time buyer loans.

It means that in January, first-time buyer loans accounted for 42% of all house purchase mortgages. Notably, they were still having to find large deposits, with 80% LTV loans the norm, but were buying cheaper properties.

Home mover activity rose only slightly year on year in comparison, up 3%, but a 16% fall from December.

CML director general Paul Smee said of the data: “Seasonal factors clearly had an impact on lending figures in January, but it still remains the best start to a year since 2008.”

The data follows the news that, despite Funding for Lending, banks and building societies cut their lending in the last quarter of last year.

Charles Haresnape, managing director of Residential Mortgages at Aldermore, said: “It’s encouraging to see that year-on-year lending figures have made a strong improvement. Funding for Lending is starting to make an impact, especially for those wanting to buy property, such as first-time buyers.

“Let’s hope this trend continues throughout the year and that we see a gradual return of consumer confidence.”

However, Andy Knee, of property services firm LMS, was not impressed by the latest CML figures.

He said: “The CML has chosen to focus on the purchase market in their commentary because it paints a more positive picture of the year ahead; however, in reality, January was very a poor month for completions.

“Although lenders have made great strides in expanding their product offerings for house purchasers and first-time buyers in the last year, reflected in growth of 10.7% and 24% respectively for these sectors, the remortgage market has contracted by as much as a fifth.
 
“According to the Bank of England figures released at the beginning of this month, remortgage approvals in January were down 6% on December and remained less than 85% of 2011 levels. 

“House purchase approvals were also down against the same time last year, all of which suggests that the optimism of the CML may be compromised in the coming months.”