19
Mar
Mortgage lending 'rose in February'
Mortgage lending increased in February as the fluctuation in the
housing market continued, lenders have said.
Gross lending for home loans in the UK rose by 6% in February
compared with January to an estimated £9.2bn, the Council of
Mortgage Lenders (CML) said.
The figures come after a slowdown in January when housing market
activity was hit by the weather and the end of stamp duty
relief.
Lenders said they expected an uneven market in the months
ahead.
Recovery?
The February lending figure is still well below the average
during 2009, and was 6% lower than mortgage lending in the same
month a year earlier.
CML economist Paul Samter said: "Lending remains relatively
weak, suggesting that activity is still at low levels."
The cold weather and the return to a £125,000 threshold for
the payment of stamp duty at the start of the year led to a sharp
dip in lending in January.
This explained the "unusual" rise in lending in February
compared with January, despite it being the shortest month of the
year, the CML said.
The lenders' group said that the start of the year was broadly
in line with their forecast of £150bn of mortgage lending in
2010.
Mr Samter said that they expected to see some emerging
confidence in the UK economy, but that the economy would slow owing
to action to tackle the fiscal deficit.
This, together with a squeeze on banks' and building societies'
mortgage funding, meant an uneven housing market in the months
ahead.
Recent house price data from lenders suggested that property
values dipped in February.
"Given the short-term weakness and distortions in the housing
market, as well as more properties coming onto the market, it was
perhaps unsurprising to see falls in some of the monthly house
price indices," Mr Samter said.
"With activity unlikely to pick up much in the short term, we
would expect to see continuing price fluctuation in the coming
months."
Jobs market
Figures published on Wednesday showed that the number of people
unemployed in the UK had fallen again, leaving the jobless rate at
7.8%.
The CML said that unemployment had not been as bad as had been
feared. Many workers had proved to be flexible, accepting pay cuts
and part-time work.
As a result - with interest rates low - borrowers have managed
to keep up with their monthly mortgage payments, which has kept a
lid on arrears and repossessions.
However, the CML said new lending was still expected to be
limited in 2010 as banks rebuilt their finances. This was likely to
mean limited mortgage availability for more "risky" borrowers, such
as those without a large deposit and first-time buyers.
However, the Bank of England's Trends in Lending report,
published at the same time as the CML figures, found that prices
had dropped for those who could get a mortgage and who offered a
significant deposit.
"In recent months, the major UK lenders reported some downward
pressure on mortgage pricing due to increasing competition to
lend," the report said.
The general election is also likely to have an effect on the
housing market, according to Brian Murphy, of the mortgage broker,
the Mortgage Advice Bureau.
"This is clearly going to play on the minds of many prospective
buyers and those people who are in a position to buy and would
probably buy now if there was not a general election just around
the corner, may well hold off making a decision until early
summer," he said.
"As a result, we could well see a levelling off in mortgage
activity in the coming months."
The Bank of England report said that demand for other forms of
lending, such as personal loans and credit cards, remained subdued
as people looked to reduce their unsecured borrowing.
Interest rates on this lending remained high compared with the
Bank rate as there was a heightened risk of people defaulting, the
report said.
source: www.bbc.co.uk/news Friday 19th
March 2010