20
Apr
Mortgage lending jumps in March, lenders report
Mortgage lending jumped to £11.5bn in March, a 24% rise
from February the Council of Mortgage Lenders (CML) said.
The figure was also 3% up on March last year, when the market
had reached its nadir in the wake of the credit crunch.
Despite this rise, the CML said activity in the property market
was still relatively subdued.
It pointed out that total mortgage lending in the first three
months of the year was still substantially lower than in the last
three months of 2009.
"Despite the increase in activity late last year and a
subsequent fall early this year - due to the end of the stamp duty
holiday - the underlying position looks to have barely changed,"
said CML economist Paul Samter.
"But with the gradually improving economic backdrop and interest
rates still low, we continue to expect a gentle improvement in
market conditions later in the year," he added.
Spring revival
The property market appears to be picking up after its immediate
post-Christmas slump.
This revival would normally happen anyway during the spring.
The rebound has been exaggerated, though, by the near-freeze the
market suffered during January and February.
This was caused by the very cold weather and the aftermath of
the rush to beat the reintroduction of the old stamp duty threshold
of £125,000.
Last week both the National Association of Estate Agents (NAEA)
and the Royal Institution of Chartered Surveyors (Rics) reported
that March had seen a big rise in the number of people putting
their homes up for sale.
The most recent official figures have also shown that the number
of completed sales in the UK went up in February to 58,000, a rise
of 15% from January.
However this was still far lower than in the same month just two
years ago, when sales stood at 85,000.
Problem
The CML repeated its warning that a huge problem is looming over
the property market.
From 2011, lenders will have to find about £300bn to repay
the government for the money it lent them via its emergency support
schemes - the special liquidity scheme and credit guarantee scheme
- at the height of the banking crisis.
As such, mortgage lending will continue to be rationed, the CML
said.
The government recently announced a further measure to prop up
activity in the market by abolishing, for two years, the 1% stamp
duty band, for first-time buyers only.
This means they can buy a home worth up to £250,000 without
paying the usual 1% property tax.
However first-time buyers continue to be asked to put down very
large deposits, typically running at an average 25% of the value of
the homes they are buying.
"The keenest rates are for those seeking a mortgage of less than
75% loan-to-value (LTV)," said David Black at banking industry
analysts Defaqto.
"Mortgages permitting 90% LTV are significantly more
expensive.
"First time buyers are particularly hard hit as they need a
substantial deposit merely to get on the housing ladder and a
significantly larger deposit to access the best rates," he
added.
source: www.bbc.co.uk/news 20th April
2010