Some 'buoyancy' in housing market, lenders say

Housing Activity in the housing market tends to pick up as the weather improves

The UK housing market is showing some signs of "buoyancy" despite mortgage lending remaining static in February, lenders have said.

Gross mortgage lending stood at an estimated total of £10.7bn in February, the Council of Mortgage Lenders (CML) said.

This was virtually unchanged from the previous month, but up 14% on the same month a year earlier.

It marked the seventh month in a row of higher year-on-year lending.

"Property sales remain fundamentally weak, but have shown strong year-on-year increases since the closing months of 2011," said CML chief economist Bob Pannell.

"Allowing for the seasonal factors that depress activity over the winter months, the underlying picture for house purchase activity continues to show some buoyancy."

Gross mortgage lending remains lower than during last summer, although activity does traditionally pick up as the weather improves.

However, a recent pick-up in activity from first-time buyers is expected to fizzle out after a 1% stamp duty rate for homes of between £125,000 and £250,000 is reintroduced on 24 March for those buying for the first time.

"We expect the number of first-time buyers to drop back after March as would-be buyers adopt a wait and see attitude," said Mark Harris, chief executive of mortgage broker SPF Private Clients.

"Weak consumer confidence and a shortage of homes coming to market are set to continue, although we do not expect interest rates to rise for three to five years, which will support the market to an extent. Mortgage rates, however, will continue to rise on the back of higher funding costs."

The Council of Mortgage Lenders' members are banks, building societies and other lenders who deliver 95% of all residential mortgage lending in the UK.

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