Gross mortgage lending in the UK dropped by 0.4% in 2019, the first year to see an annual fall since 2010, new data from UK Finance has revealed.

The figures showed gross mortgage lending was £268.72bn in 2018, which fell slightly to £267.55bn.

UK Finance’s latest Household Finance Review suggested that throughout the year, the UK also saw a modest decline in the number of new loans in both the residential and buy-to-let (BTL) purchase markets – which was a continuation of the trends seen in 2018.

The data also indicated, however, that price increases had more than offset these declines, resulting in a continuing positive cash advance increase in gross mortgage lending, a trend that had been consistent since 2011.

Landbay CEO and co-founder, John Goodall, commented: “A fall in new mortgage lending is disappointing news for the housing market, but those hoping to see the much-anticipated ‘Boris Bounce’ must wait a little longer.

“We won’t see the impact of any change in decision-making in January until around April, when purchases complete; all eyes will be on the lending levels in the second quarter to see whether the decisive election victory has actually impacted sentiment. But the hard truth is that housing supply is limited, and more homes need to be built to quench the demand of buyers and renters alike.

“The market is calling out for consistency and stability, and the upcoming Budget is a chance to address some of the challenges facing the sector. Brexit negotiations rumble on, but now is the time for domestic policies to be brought to the top of the agenda.”

Trussle head of mortgages, Miles Robinson, added: “The fall in mortgage lending highlights what we’ve known for some time; that there is a real lack of suitable properties at the more affordable end of the market. When you also consider the closure of the Government’s Help To Buy ISA – there will be even more pressure on the new Chancellor, Rishi Sunak, to deliver for first-time buyers in next week’s Budget.

“Moving forward, while we’re yet to see the impact of uncertainty linked to coronavirus on the housing market, if lending continues to slow – the time might be coming for the regulator to consider a gentle easing of restrictions around affordability.”

UK Finance’s review also suggested the wider economic benefit of any big public spending rises will ‘take time to be felt’ and that the developing situation with the coronavrius looked set to ‘reshape’ the contents of the Budget – with economic resilience and political de-risking ‘likely’ to feature significantly.

Hope Capital CEO, Jonathan Sealey, said: “Over the past few months it has felt as though we were experiencing a real sea change in the market as the political arena became less of a focus. We have definitely seen the busiest start to any year so far as people started looking forward to a more stable environment. Unfortunately, that may well be up in the air again as nervousness surrounding the coronavirus outbreak takes hold.”

Share Story: