Confusion over latest mortgage lending figures

Posted on July 21st, 2011 | Categories - House Prices, Mortgages

Mortgage application confusionLatest figures from the Council of Mortgage Lenders (CML) show, according to the BBC, a “subdued” housing market, however the Daily Telegraph describe them as showing a “jump”.

Whatever the description the hard facts are that in June total lending to home owners was £12.9 billion, which represents a 16% increase on May 2011 but a fall of 3% on June last year.

The figures also show that total lending of £63.7 billion in the first half of this year was only slightly down on the £64.1 billion let in the first six months of 2010. The last quarter has seen an 11% rise in lending compared to the first three months of the year.

Economy

The CML put the subdued levels of year on year lending down to the economy and weakness of household finances.

Bob Pannell, chief economist of the CML, said: “The UK economy continues to experience disappointing economic growth, strong consumer price pressures, falling disposable incomes and an uncertain jobs market.”

He continued “Recent emotive headlines on repossession prospects appear overplayed, given that the state of our economy does not warrant large interest rate rises for the foreseeable future.

“But we do expect to see moderately higher arrears and possessions through the second half and into 2012, as we have previously forecast.”

Buy to let mortgages

The CML believe that a strong rental market, perhaps driven tighter mortgage lending criteria to first time buyers or nervousness about house prices, helped to boost mortgage lending.

“Landlord activity appears to have picked up recently and with evidence of strong rental demand this should help to underpin activity over the coming months,” said Bob Pannell

These comments are echoed by the National Landlords Association (NLA) who have seen an increased in the mortgage products available for buy to let investors with additional lenders entering the buy to let market.

Richard Price, director of operations at the NLA, said: “Competition for quality rented accommodation is currently very high. It is likely that before the end of this decade one in five households will rent privately.”

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