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.”

Tags: new mortgage approvals

Category: Property For Sale