However, this slight rise in confidence, from 51 in April to 52 in May, may mask a forthcoming decline in house price inflation, according to the lender. This could be the result as people’s optimism, which has been buoyed by the ending of the conflict in the Middle East and the traditional boost spring generates in the housing market, subsides and the underlying weaknesses that has already seen house price growth begin to decline become more apparent.
Commenting on this, Andy Gray, head of mortgages for The Woolwich, said: “A slight upturn in confidence is unsurprising, and reflects the fact that jitters surrounding recent geopolitical uncertainty, particularly emanating from the Middle East, have now subsided. More importantly people are more upbeat because the spring period traditionally heralds a pick-up in activity in the housing market. But, when you take these factors out, it is difficult to get away from the fact that double digit house price growth is unsustainable and over the coming months this will have a moderating influence on people’s expectation that the value of their home will continue to rise.”
UK gross mortgage lending has increased from £20bn in April to an estimated £22.7bn for May, which marks an increase of 13%. Overall mortgage lending continues to remain strong as remortgaging continues to drive the mortgage market. (Gross mortgage lending up 16% year on year from £19.5bn in May 2002 to £22.7bn for May 2003). The Woolwich expects lending volumes to remain high year on year as people continue to remortgage to historically low and competitive interest rates.
