Mortgages to remain low

The latest figures were released during a week that the City watchdog proposed strict new rules for the mortgage market, which would see home owners forced to disclose how much they spend on alcohol and clothes when they apply for a home loan.

Total gross mortgage lending rose 2 per cent to £12.5 billion, but it is still 27 per cent down on the time a year earlier, according to the Council of Mortgage Lenders.

The CML attributed the relative stability in lending during recent months on a pick up in people buying new homes being offset by a decline in the numbers remortgaging.

Paul Samter, an economist at the CML, said: “House buying activity is running at considerably higher levels than around the turn of the year. However, it remains weak on any historic comparison and is unlikely to rise much further given the constraints the lending community faces and a still difficult economic backdrop.

“But there are some positive signs to look to. While the retail side, both in terms of mortgage and savings activity, has thrown up few surprises, it is encouraging that the wholesale markets have begun to thaw. Some of the UK’s highly rated institutions have been able to issue structured finance products backed by mortgages in recent weeks. This is only an early sign of wholesale investors tentatively coming back into the new issuance market, but is welcome nonetheless.”

Andrew Montlake, of mortgage brokers Coreco, said: “While these latest figures hardly set the world alight, they do highlight the continued stabilization in the housing market and some undoubted positive signs.

“There is, however, a danger that proposed regulatory changes in the near future could serve to derail this improvement. It’s ironic that, on the one hand, the Government is trying to force lenders to lend more, and on the other hand, is planning to make it harder for them to do just that.

“What is clear is that any recovery will be inherently purchase-led. While remortgages are continuing to drop off, buyers are still clamouring to take advantage of low rates and low prices.”

House Price Rises

More estate agents are reporting house price rises than at any time since the credit crunch caused the bottom to fall out of the property market, it is claimed today.

Twenty-two per cent more agents saw rises than falls in September, according to the Royal Institution of Chartered Surveyors.

This is the highest ‘positive reading’ since May 2007 and compares with a figure of 10 per cent in August

The evidence suggests the price revival is being driven by an acute shortage of properties, particularly family homes. There is also clear evidence of a North-South divide, with prices in London and the South-East showing a surge while many parts of the North are still suffering falls

Ian Perry, a spokesman for the institution, said: ‘A lack of supply is still underpinning the rise in house prices.

‘Meanwhile, the level of inquiries from potential purchasers is increasing.

‘This imbalance between demand and supply suggests that house prices will move higher in the near term.’

Separate research from the Council of Mortgage Lenders shows that the number of loans for house purchase in August was up 29 per cent on the same month last year.
The figure hit 53,000, which was down marginally on the July total of 56,000.

The August figure is more than twice that seen at the start of the year, but still well down on the 100,000 that is typical of a thriving market.
The Bank of England and other economists have warned of ‘false dawns’ of recovery in the housing market and wider economy.
Some commentators say the current price revival could fall into this category, given that it is driven by a property shortage rather than a wider economic recovery

Recession kills off the property dreams

The recession has led to thousands of Britons giving up on the dream of owning their own homes, says a survey by the National Association of Estate Agents (NAEA).

 In some British cities, as many as 30 per cent of adults no longer wish to own property, citing high prices and fears over redundancy as reasons.

 

The cities with the largest percentage of adults no longer looking to own property are Cardiff (30 per cent), Manchester (27.7 per cent) and Belfast (25 per cent). At the other end of the spectrum, 12.5 per cent of adults in Liverpool, 11.1 per cent in London and 10.3 per cent in Southampton are more optimistic about getting on the property ladder.

 

The lack of enthusiasm for all things property related is perhaps understandable in light of news showing that mortgage lending conditions are still tight. Bank of England figures released last week show a fall in the number of new mortgages in August, the first drop in 10 months. The bank’s quarterly credit conditions survey showed that approvals slipped from 52,404 in July to 52,317 in August. This is about half the level of mortgage loans seen at the height of the property market boom.

 

The NAEA says that the recession alone cannot be blamed for the pessimism about owning property and that the Government and lenders should shoulder some of the responsibility for the market torpor.

 

“The Government has so far refused to create a level playing field for house-hunters by reforming stamp duty, a tax on aspiration,” says Peter Bolton King, chief executive of the NAEA.