Despite a slight drop off in gross mortgage lending from the previous month, which stood at £17.6 bn, total gross lending for 2013 is expected to exceed forecasts made at the beginning of the year.
CML chief economist Bob Pannell said: "Gross lending for 2013 looks set to reach £170bn, higher than the £156bn we originally forecast, but still a far cry from the £363bn experienced at the height of the lending boom in 2007.
“New rules hardwire in a more risk-averse lending environment for the future and so, while we expect lending to rise in line with better economic conditions, the next two years are unlikely to see lending levels getting very far above £200 bn a year."
Peter Williams, executive director of the Intermediary Mortgage Lenders Association, said: “Today’s CML figures and analysis show how far the mortgage market has changed in 2013 buoyed not least by a clear commitment from the highest levels of government to make getting a mortgage a far more realistic proposition than during the recession.
"The Funding for Lending Scheme and Help to Buy have been important factors in stimulating market confidence and expectations. Indeed the planned withdrawal of FLS support in 2014 and the lack of market reaction to this are clear indications that wider conditions have improved and mortgage lending can now continue to grow under its own steam.
“Indeed IMLA’s view is that the market in 2013 will exceed the £170 billion set out in the CML figures.”
Williams said that a responsible, risk adverse approach has now become deeply ingrained in the market’s culture which can be evidenced by greater lending volumes but falling mortgage arrears and repossessions.
He added: “With the new rules under the Mortgage Market Review coming into force in April 2014 it will be important to retain the balance between tighter controls and the real and still unmet homeowner ambitions that remain across the UK.
“Questions still need to be answered during 2014 – including what the new ‘normal’ will look like for the mortgage lending market, what funding is needed to support it, and who will be inside this new market or outside of it.
“Until the situation becomes somewhat clearer we will not know what levels of homeownership the market can support and what role government must play. Despite this we end the year on a good note.”
Jonathan Harris, director of mortgage broker Anderson Harris, said: “With mortgage lending up 30% compared with November last year the market continues in recovery mode yet is still a long way off its peak.
“The year will finish off far stronger than predicted at its start with lending volumes expected to rise into next year and 2015.
“Help to Buy will make it easier for first-time buyers to get a mortgage and lenders are set to continue to offer competitive low mortgage rates to entice borrowers.”
But Harris warned that borrowers must also bear in mind what will happen when interest rates rise.
He said: “With unemployment falling far faster than predicted the spectre of an interest rate rise sooner rather than later may have spooked those worried about how they will cope when this happens.
“While we don't expect interest rates to rise in the short term it is vital to plan ahead and secure a longer-term fixed-rate mortgage if you are worried about what will happen when they do.”
Jeremy Duncombe, director at Legal & General Mortgage Club, said: “The increased lending figures suggest a renewed confidence in the stability of the market; however factors such as Help to Buy are going to have a continued impact on how the market grows in the coming months.
“Alongside these concerns is the on-going issue of an undersupply of housing across the UK. If we want to see these trends continue to rise and for lending conditions to improve it is vital that adequate housing supply is available to meet the demand both now and into the new year.”
David Copland, LSL’s director of mortgage services, said the significance of a 30% year on year rise in mortgage lending indicates that there is still a lot of pent up demand in the market at the moment.
He said: “With big pipelines going in and the market working right up to the Christmas break I expect it to continue through until April when the MMR will shake everything up with longer transaction times and tighter criteria.”
Copland said he believes the CML’s forecast of the market not exceeding £200bn was “overly pessimistic”.
“This year’s market has exceeded even the most optimistic of forecasts and, despite the MMR, I expect next year’s to do the same.”
