“Widely voiced fears in recent months about the housing market have proved to be wide of the mark."
Gross mortgage lending in August saw a 7% month-on-month increase, according to new estimated figures from the Council of Mortgage Lenders.
Gross mortgage lending reached £22.5 billion in August up from £21.1 billion in July, the trade body said.
The estimated figures also show a year-on-year increase for 15% for month, up from £19.5 billion in August.
Mohammad Jamei, CML senior economist, suggested intervention by the Bank of England has bolstered the market.
He said: “Widely voiced fears in recent months about the housing market have proved to be wide of the mark. Prospects for house purchase activity post-referendum look slightly subdued, when compared to late 2015 and early 2016. However, sentiment in the market recovered in August. This is reflected in stronger-than-expected transaction figures, and in our gross lending estimate.
“This recovery in sentiment is likely to be down to a number of different factors, including the Bank of England’s monetary stimulus and its introduction of the Term Funding Scheme in August. A subsequent uptick in approvals is anticipated, albeit still at levels lower than earlier this year as affordability constraints and lack of properties on the market for sale continue to bear down on borrowers. The Bank also continues to indicate another rate cut on the cards, if medium term prospects remain unchanged.”
Jeremy Duncombe, director, Legal and General Mortgage Club, highlighted the critical supply and demand imbalance at the centre of the housing crisis.
He said: “For many months, we have seen lending figures out pace the monthly transactions data. Whilst we shouldn’t let ourselves get carried away by ‘Brexit-mania’, we also shouldn’t let these results distract us from the central problem that continues to plague our housing market – a fundamental imbalance between the supply of property and the demand for homeownership.
“Looking to the future, it will be interesting to hear the announcement in the Autumn Statement, which will determine the future progress of our housing market. If we are ever going to see a return to a healthy and balanced market, thousands more affordable homes must be built in order to meet the demands of prospective home buyers.”
And John Eastgate, director of sales and marketing at OneSavings Bank said that despite the figures, the lack of affordable housing continues to affect the market.
“Mortgage market activity is slowly returning to its former health, as concerns over political and economic instability are pushed to one side by more prospective borrowers unwilling to wait indefinitely,” he said.
“Against this backdrop, remortgaging has become the key driving force, as borrowers make the most of record low mortgage rates which, if anything, might fall even further. The affordability gap continues to drag on house purchase figures, and will do so for as long as housing demand outstrips supply, bolstering house prices in the long-term.”
