Gross mortgage lending surged in March due to the buy-to-let let boom but transactions now look set to drop by 10,000 a month, the Council of Mortgage Lenders has warned.
The CML estimates that gross mortgage lending reached £25.7 billion in March, driven by a surge to beat the second property stamp duty surcharge deadline on 1 April.
Lending was 43% higher than February’s £18 billion and 59% higher than in March last year, making it the best March since before the financial crisis in 2007, when gross lending hit £30.9 billion.
CML economist Mohammad Jamei said: “The distortion caused by this stamp duty change appears to be larger than any previous stamp duty change we’ve seen.
“As a result, we expect there will be about 10,000 fewer mortgaged transactions each month in the second quarter of 2016 than would otherwise have been the case, offsetting the increase in activity seen in March.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said that March was a "stonking" month for the mortgage market as investors rushed to complete before April's stamp duty hike.
“The market is now likely to pause for breath as investors consider their next move.
“That said, we don’t expect to see a slowdown in activity on the residential side. Interest rates are unlikely to rise anytime soon which will continue to attract first-time buyers and second steppers to the market."
Harris said the EU referendum may foster some uncertainty but challenger banks are keen to lend and many buy-to-Investors will now go down the limited company route.
Jeremy Duncombe, director, Legal & General Mortgage Club, said: “Whilst these latest figures seem to suggest that more people are securing mortgages, this rise in lending is actually the result of ever-increasing house prices.
“The reality is that today’s buyers are being forced to borrow more to cover the cost of their home, which is artificially inflating lending figures.”
Matt Andrews, managing director at Bluestone Mortgages, warned that a growing number now sit outside the "perfect borrower" category and struggle to get access to lending, such as the self-employed.
“Therefore it is vital that more flexible lending options come into the market to cater to hard working people across the UK who have experienced genuine hiccups and deserve lenders that listen and treat each case with a tailored, individual approach.”