According to the latest Council of Mortgage Lenders’ (CML) Market Commentary, gross lending for December was estimated at £20.4 billion.
In fact, lending during 2016 was up 12% year-on-year in comparison to 2015, finishing up at £246 billion in total.
Other report highlights included:
- Marginally higher property transactions in 2016 at 1.23 million
- Buy-to-let sector lending lower compared to a year ago
- The Housing White Paper will deliver homes in 2018 onwards
THE UK ECONOMY
The economy fared well in 2016, with 2.1% growth overall, supported by low unemployment at 4.8% and growth in weekly earnings at 2.8%.
Still below the Bank of England’s target of 2%, inflation reached a two-year high in December of 1.6%. However, the CML expects this to increase as food, energy and import prices rise. This forecasted increase is the reason for lower forecasted growth in 2017, as consumer spending decreases from pressure on earnings.
The UK mortgage market ended 2016 at a healthy £246 billion, despite the ups and downs during the year including an acceleration in buy-to-let transactions in March before the stamp duty change and the post-change slump in activity. Brexit also caused a summer slump in activity, with confidence then returning towards the end of the year as the Bank of England took action – a roller-coaster to say the least.
First-time buyer activity continued to increase during 2016, reaching 337,000 in the 12 months to November 2016, according to the CML report. There were 1.23 million property transactions in 2016, slightly higher than 2015.
The re-mortgage market gained pace in 2016, as competing lender rates and a low interest rate incentivised activity.
The market is still being held back by the lack of available and affordable property, an issue which the Housing White Paper is set to address. However, it is unlikely that this will come to fruition until 2018.
Henry Knight, Director, Springtide Capital commented: “2016 was not only an historical year but has shown how resilient we are as a country, with the Bank of England coming into action to allay fears and bolster the economy. All in all, 2016 was a good year for mortgage lending, despite the political and regulatory cards that were dealt. That said, the changes to stamp duty and buy-to-let taxation have had a particularly negative effect on the London market.”
If you would like to speak to a Springtide Capital Mortgage Consultant please call 020 3040 4400.