by Mark Johnston
Market to Pick UpMortgage lenders are all agreeing that there are “welcome signs of life” but the Council of Mortgage lenders remain sensibly cautious due to the fragile state of the UK economy, the rising number of reportages and fears over the wider European economise lacking confidence. Market experts are expecting the housing and mortgage market to continue to remain flat for a little while further. There was a slight rebound in May but industry experts are still holding steady that there is further gloom on the horizon. According to the Council of Mortgage Lenders (CML) gross mortgage lending for the UK is estimated to be in the region of £11.3 billion for May. This is an increase of about 12 per cent from the previous month. This is only slightly less than the 11 per cent from May 2010.The CML said that they didn’t expect any significant change to the status quo in the near future. These figures were released as the government launched another scheme to try and help first time buyers get a foot on to the housing market. The scheme is a combined effort from the government and housebuilders to offer an equity loan of up to 20 per cent to potential buyers. £500 million is being made available by the Government all over the UK for the next two years to fund this scheme by the name of FirstBuy. There is an expectation that over 10,000 people in mainland UK will be helped through this schme.Over 100 builders have opted in to help out, and banks have agreed to offer the 75 per cent LTV. The money released into the FirstBuy programme will be interest free for up to five years and the interest will be charged at 1.75 per cent in the sixth year and after that interest would be charged at inflation rate plus 1 per cent. Grant Shapps, the Housing Minister said “With 80% of young first-time buyers depending on parental help, I am determined that we pull out all the stops to help those who want to take their first steps onto the property ladder.”Director of the CML, Michael Coogan said that “Lending in May recovered after low activity levels in April,” “Distorting effects from Easter and bank holidays cloud the current picture, but the likelihood seems to be for essentially flat levels of lending over the next couple of months.”Executive, Jonnathan Samuels of the Dragonfly Property Finance said that “Competition and appetite among lenders is returning but they are still very conservatively minded, as indeed are borrowers in the current anxious economic climate.”Nationwide Building society, Barclays and Melton Mowbray Building society are some of the lenders taking part in the new FirstBuy scheme according to the Council of Mortgage Lenders. The government has pledged over £250 million into this programme, mainly funded for the heavy levy on the banks and will only be in existence for one year.
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