The Council of Mortgage Lenders has come under fire after issuing upbeat data which grabbed headlines but which critics say is misleading.
On Friday, the CML announced that gross mortgage lending increased to £11.6bn in March.
It said that this was 9% higher than February’s figure of £10.6bn, but 8% lower than £12.6bn in March 2012 – when lending was distorted by first-time buyer activity shortly before the Stamp Duty holiday expired.
The CML also made it plain that even March’s rise from February did not stop lending for the first quarter of this year dropping 9% from the last quarter of last year, and equalling the figure for the first quarter of 2012.
CML chief economist Bob Pannell nevertheless insisted: “Conditions in the housing and mortgage markets continue to show signs of improving. The improvement in funding markets over the past year, reinforced by the incremental benefits of the Funding for Lending Scheme, has been the key catalyst behind stronger housing activity.”
Richard Sexton, director of e.surv chartered surveyors, accused the CML of exaggerating the health of the market.
He said: “The 9% increase is rather misleading, and exaggerates the health of the market – particularly the first-time buyer market.
“A large chunk of lending in March was for remortgaging, particularly by landlords who are trying to manufacture enough money to make further additions to their portfolios.
“Criteria for new buyers are still tight, and borrowers have to cross a high threshold to access the more affordable mortgages. Inflation and weak wage growth have pillaged personal finances, and leached away money that could be used for a deposit. Potential buyers are trapped in a vicious circle of high rental costs, escalating living costs and rock bottom savings rate.”
Mark Blackwell, managing director of mortgage data specialists 2it2, was also sceptical. He said: “Real improvements in the lending volumes are still being made in the most incremental steps. But even then, this data doesn’t necessarily contain exactly what it says on the tin.
“Our own figures support some improvements in confidence – in some regions – but activity isn’t as simple as that. It’s possible that some of the improvements reported by the CML could be due to Funding for Lending. But a cause and effect relationship is far from certain.
“On a quarterly basis, lending is flat compared to the start of last year – when Funding for Lending wasn’t even a twinkle in the Chancellor’s eye.”
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