Gross lending for the first quarter of 2011 was an estimated £30.1bn, an 11% decline from the fourth quarter of 2010 (£33.9bn) and a 1% increase from £29.7bn in the first three months of 2010.
CML chief economist, Bob Pannell, said:“The housing market has emerged hesitantly from hibernation. Household finances are under a lot of pressure, and as a result demand for house purchase loans fell in the first three months of 2011. Lenders expect mortgage credit availability to improve this quarter, and this should help to underpin house purchase activity albeit at pretty low levels.
“Remortgage demand, meanwhile, continues to be firm, presumably linked to expectations of higher base rates. Remortgage approvals in February were the highest for more than two years. Stronger remortgage activity looks set to continue propping up overall lending.”
Brian Murphy, head of lending at independent mortgage brokers Mortgage Advice Bureau, said the figures were a welcome surprise.
He said: "The figures are surprisingly positive and reflect what we're seeing in the market, with remortgage activity particularly buoyant at the moment as homeowners continue to take advantage of the favourable interest rate environment.
"However, it's important not to get too far ahead of ourselves. The level of mortgage activity in March is still down on 12 months ago, and it's far too soon to talk optimistically about a housing market recovery when buyers are still suffering from a serious lack of confidence.
"How the market bounces back in May, following a predicted April lull, could very much determine how the mortgage market performs for the rest of the year."
John Mawdsley, chief executive officer of Omnii Solutions, agreed that the figures should be received with some caution.
He said: “Make no mistake, the long-term rehabilitation of the market is still some way off. The strong month on month rise is a pyrrhic victory, set as it is against the 2% decline year on year. The 21% increase might look great compared to February - but February was a dire month in its own right.
“Nonetheless, brokers should be encouraged that borrowers and lenders alike have shown great resilience - despite the bad news that has shrouded the economy in recent months.”
Paul Hunt, managing director of Phoebus Software, was less sanguine saying: “On the face of it, a 21% rise in gross lending sounds like exciting news for the champagne industry. But anyone who pops a cork in celebration will be left feeling flat.
“It’s going to be some time before the economic horizon looks cloud-free and until then, prospective borrowers will continue to be left frustrated by tight lending criteria and limited mortgage finance.”
