Record highs amidst a muted forecast


Caveats and cautious predictions aside, let’s talk billions, 2015 ended at £220.3 billion – up eight percent against 2015 – the highest annual lending figure since 2008 according to CML’s latest report!

December may have come in three percent lower than November, finishing at £19.9 billion, but it was still 23 percent higher than December 2014 – a great result.

So, whilst economics boffins predicted a good year, yet given previous mistakes, we’re notably cautious with their forecasts, they were close to the mark. The quarter finished on £62.3 billion, a one percent increase on the previous quarter and a 23 percent increase on the fourth quarter of 2014.

CML Economist, Mohammad Jamei has the following to say about 2015:

“Lending ended the year stronger than it started, with our estimate of nearly £20 billion lent in December. This brings total lending to just over £220 billion for 2015 as a whole, and slightly higher than we had anticipated. The low inflation environment, along with real wage growth, an improving labour market and competitive mortgage deals have all helped to underpin demand.

“Having said this, the upside potential looks limited over the near-term, as the supply of existing and new properties on the market remains weak, and affordability pressures weigh on activity. There is an added element of uncertainty as we wait to see the impact of tax changes on the buy-to-let sector.”

Continuing the upward trend

Despite some cautious forecasts, the general consensus for 2016 seems to be quite optimistic overall and that has certainly been felt at Springtide Capital – we’ve had an incredibly busy start to the year, and as predicted, this is partly due to the impending changes to stamp duty.

Ultimately, lending is being supported by first-time buyer incentives, low unemployment, low inflation and low interest rates – giving people more household spending power, which isn’t forecasted to change dramatically anytime soon.

There are still some vital factors which could limit lending potential in 2016 though, and we’re still far from pre-crisis lending levels:

  • There continues to be a shortage on property availability, which continued to fall during 2015, fewer people are putting their homes up for sale and the level of new builds remains low.
  • CML estimates that housing starts and completions are around 135,000 for 2015, which is 25 percent less than pre-crisis levels.

Springtide Capital Director, Henry Knight reflects on 2015: “The second half of 2015 showed a positive improvement, with a strong performance from buy-to-let, first-buyers and home movers. There are a number of incentives in place for first-time buyers in 2016, which we expect to strengthen the market even more. We’ve already seen a terrific start to the year, partly due to impending changes to stamp duty. Though there are still factors limiting lending potential, we’re definitely on the right track.”