Gross lending rose by 24% last month rising from £9.3bn in February to £11.5bn in March, but the first three months of 2010 saw the lowest quarterly total for new business since 2000.
The Council of Mortgage Lenders, says March’s £11.5bn was a 3% rise from the £11.2 billion seen in March 2009 and the lender trade body says the figures are in line with the typical seasonal pattern of a rise in lending volumes in March.
However, gross lending for Q1 of 2010 was an estimated £29.5 bn, a 24% decline from Q4 of 2009 when gross lending totalled £38.9 billion.
This was also a 9% decline from £32.4bn in the first three months of 2009.
The CML says this is the lowest quarterly lending total since the first three months of 2000, but is very much in line within its forecast of a gross lending total of £150bn this year.
Paul Samter, economist at the CML, says: “Overall, housing and mortgage activity remains subdued, but is comfortably higher than in the depths of the recession a year ago.
“Despite the increase in activity late last year and a subsequent fall early this year – due to the end of the stamp duty holiday – the underlying position looks to have barely changed. But with the gradually improving economic backdrop and interest rates still low, we continue to expect a gentle improvement in market conditions later in the year.
“However, the longer-term problems facing the market remain and will limit the speed of recovery in the housing market and wider economy. Financial institutions still face the prospect of around £300bn of official support schemes beginning to end from next year, and will need to find alternative funding sources. This will likely limit how much new funding can be made available to the housing market.”
Alison Beech, business relationship director at Spicerhaart, says the issue of government support schemes and the uncertainty ahead of the election are llikely to dampen any recovery.
She says: “Taking all of these factors into account, while this is a welcome baby step in the right direction it remains unlikely that we are going to see a significant and sustained recovery anytime soon.”