Mark Harris, chief executive of mortgage broker SPF Private Clients, said the dip in lending was "fully expected" but warned of potential hiccups on the horizon.
Mortgage lending in April was down 29% month-on-month but is still 16% higher then the amount lent in April 2016, according to theCouncil of Mortgage Lenders.
The CML estimates that gross mortgage lending reached £18.5bn in April, down from £26.2bn in March, making itthe highest lending total for an April since 2008 (£25.3bn).
CML economist Mohammad Jamei said:“As we move past the stamp duty change that came into effect at the start of April, we expect to see a quieter second quarter, as some transactions that were due to take place were brought forward to the first quarter of this year. This is likely to mean that over the next few months buy-to-let takes a back seat as lending is driven by first-time buyers, movers and remortgage customers.
“The underlying picture still shows signs of growth, as the market remains underpinned by strong fundamentals such as increasing wages and rising employment. But it is possible that the uncertainty around the upcoming EU referendum in June will weigh on activity in the upcoming months.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said the dip in lending was "fully expected" but warned of potential hiccups on the horizon.
He said: "April’s dip in lending compared with March was fully expected as investors and second homebuyers brought forward their buying decision to avoid paying higher stamp duty. The CML reported earlier this week that March saw triple-digit year-on-year growth in buy-to-let reflecting a surge in activity in the sector which was not repeated in April’s figures. The buy-to-let sector is now likely to pause for breath as investors consider their next move, possibly later in the year.
"That said, we don’t expect to see a significant slowdown in activity on the residential side. There are still excellent mortgage rates available, both fixed and variable. Interest rates are unlikely to rise anytime soon which will continue to attract first-time buyers and second steppers to the market. The March CML figures showed a healthy increase in lending to first-time buyers compared with last year, which is encouraging as they would not have been motivated by stamp duty changes. The raft of high loan-to-value deals on the market will make life easier for first-time buyers, and with Barclays removing the deposit requirement on its Family Springboard mortgage recently, lenders seem prepared to be increasingly flexible.
"There are potential hiccups on the horizon which may foster uncertainty, such as the EU referendum, but for many people life will go on and it will be business as usual. The challenger banks are keen to lend, while more established lenders also wish to bring in more business, which will be reflected in cheap rates and some tweaking of criteria.
"Affordability constraints will continue to be an issue for some borrowers. Independent advice will be crucial, particularly for those borrowers who are older, self-employed, or require interest only."
David Whittaker, managing director of Mortgages for Business, added: “Such a drop in lending isn’t really a terrible drama. Mostly, this is about a change in timings to buy-to-let purchases. Nobody likes being an April Fool, and with thousands of pounds potentially at stake there was a massive incentive for property investors to do business in the first quarter. The fallout from this was always likely to be a subdued lending total in April, and today justifies those suspicions.
“Underneath the month-on-month eddies of lending patterns, there is a strong and steady current of buy-to-let lending critical to meet growing public demand for private rented accommodation. Underlying annual growth in April shows a more sustainable path aside from any short-term fluctuations – and the need for buy-to-let mortgages to support the role of landlords.”
Andrew McPhillips, Yorkshire Building Society chief economist, said:“Although the rush to beat the new stamp duty rate has subsided, mortgage and housing market activity is unlikely to normalise any time soon. The looming EU referendum may cause some people to be more hesitant about buying a property, particularly overseas investors. This may cause further distortion in mortgage and housing market activity though is likely to be more heavily focused on specific regions of the UK such as London and the South East.
“This could lead to the mortgage and housing markets being less predictable, at least in the short-term. Additionally, given that indices which measure market activity do so in different ways, we might see more variation than usual in the month-on-month growth recorded by different house price indices and other market monitoring devices over the coming months.
“When the market shows unpredictable behaviour as it may well do in the coming months, it’s important to not get caught up in short-term market fluctuations and instead look to the long-term trends. Demand may fluctuate, but supply remains tight, meaning that mortgage lending and house prices alike should show growth in the long-term, as people’s appetite to own a home is likely to remain strong in the future.”
