Mortgage lending up 21% to highest in five years

Alex Johnson

7a3d6f814e6467f501fc69765e33dbdb9b4e117c 300x199 Mortgage lending up 21% to highest in five yearsThe Council of Mortgage Lenders estimates that total gross mortgage lending in May increased to £14.7 billion, a rise of 21% from £12.2 billion in April and 17% higher than the £12.6 billion in May 2012. This is the highest monthly estimate for gross mortgage lending since October 2008.

CML chief economist Bob Pannell said: “Funding conditions, helped by the funding for lending scheme, continue to look favourable and are supporting more competitive mortgage pricing and availability and a gradual resumption of lenders’ risk appetite. While the direction of travel is clear and fits well with the more positive housing surveys from RICS and others, our forward estimate does imply somewhat stronger house purchase activity than we had been expecting. This may reflect a degree of pent up sales following the extended spell of poor weather earlier this year.”

However, a report from ratings agency Standard & Poor’s claims that around one in seven people with mortgages in north-west England are in negative equity compared to less than one in 100 in the south-east, and that the north-south gap is widening. The agency’s figures show north-west has the highest proportion of “trapped borrowers” at 13.5%, followed by  Yorkshire and Humberside (10%), the north-east and Wales (both 8.5%), and the West Midlands (7.3%).

Peter Williams, Executive Director of the Intermediary Mortgage Lenders Association said: “Today’s figures are something of a double-edged sword. They show mortgage lenders are very much open for business and willing to compete over pricing for higher loan to value (LTV) deals. Despite capital requirements curbing lending, borrowers’ chances of securing a low deposit mortgage are certainly improving.

“But let’s not forget that higher LTV mortgages are of limited use if property is in short supply and house prices are pushed even higher by the imbalance. We can take heart from improving conditions, but now is the time for a proper discussion involving government and industry on the future of housing policy in the UK. Otherwise, we may find a momentum building that slips out of our control.”

In other mortgage news:

* The Mortgage Works introduces its lowest ever fixed rate at 2.49 per cent, with effect from tomorrow, a two year product is available to first time and experienced landlords

* The Post Office says it intends to lend £2.5bn by the end of the year to movers, first-time buyers and those looking to remortgage with 50 mortgage specialists in place by the end of June and plans to increase this number by the end of the year across the country

* Barclays’ Family Springboard mortgage will benefit from a rate cut of 70 percentage points from 4.69% to 3.99%. Family Springboard allows relatives to use their savings to help first time buyers get a mortgage by holding 10% of the purchase price in a Helpful Start savings account which means the homebuyer can be offered a 95% LTV mortgage.

Zoopla new buy-to-let guide
Zoopla – one of the Independent’s partners – has a usesful (and pleasantly short) buy-to-let guide which offers some background information and advice.

Over-optimistic students
Although the average age of a first-time buyer is 30, a Rightmove Students survey says 65% of students expect it to take five years or less to get onto the property ladder and buy their first home. Of the students polled in the survey, 32% said their parents paid for their accommodation.

Empty homes
In November last year Communities Minister Don Foster MP announced a round of funding aimed at bringing empty homes (and commercial properties)  back into use. Today, allocations of just under £40.8 million were announced which could deliver up to 1,939 new affordable homes.

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