If you read the papers or kept up with the news last month, you would have assumed nothing was happening apart from the lead-up to (and the fallout from) the UK Referendum. However, now we have the figures for mortgage lending for that same month, and it would appear there was a lot of activity in that area as well.
The Council of Mortgage Lenders (CML) has revealed the level of gross mortgage lending last month was £20.7 billion. This was £2.9 billion higher than the previous month, which saw £17.8 billion being lent to mortgage applicants. It represents a 16% rise from one month to the next, as well as an increase of 3% on the same period in 2015.
Wait and see
It would appear that many prospective home buyers were keen to get on with things as per usual in the run-up to the UK referendum on membership of the European Union. This was borne out by the strong figures indicated above.
It will be intriguing to see how July’s figures pan out in contrast. Some experts believe the ‘wait and see’ approach may now kick in. Some people who were looking to move home may now wait to see what Brexit would entail before moving. This might be particularly true in cases where people would move to another country in the UK, i.e. from England to Scotland. In reality, a lot is still uncertain. July’s figures will take into account the immediate aftermath of the vote for Brexit and indicate how the immediate future might pan out.
Could higher house prices be partly responsible?
They could well be, according to reports just out that are responding to the rise. The latest figures show that house prices are continuing to go up by around 8.4% annually. When this is factored in, the increase in mortgage lending can clearly be seen to have been achieved in a variety of ways.
What does the second half of 2016 have in store?
This is perhaps the biggest question of all. Experts at the CML believe the figures could be dampened in the coming months. July’s figures may turn out to be more subdued given the vote for Brexit, but this could be replicated in future months as well.
However, we may not see a significant dip in lending – at least not if current reports are to be believed. We won’t know until each month’s figures become clear of course, but it would appear that any drop that does take place will be smaller than some may have previously assumed.
Re-mortgaging could turn out to be more important to each month’s figures than new purchases, but this remains to be seen. June’s boost to the market may therefore be a temporary thing rather than something that is bound to continue next month. Indeed, if Brexit does have an effect on July’s figures, we could soon see a big swing in the opposite direction.