by Mark Johnston
Mortgage Lending is Expected to Increase in 2013.
The UK’s mortgage market has been stifled by the lack of credit flowing through the international bank lending facility and until recent months, the higher price of interbank lending.
In today’s lending climate most people are worried they will have a harder time getting a loan.
Figures from the British Bankers’ Association (BBA) have shown a recent pickup in mortgage approvals to home buyers. Mortgage availability has surged and is expected to continue rising this year in the clearest signal yet that efforts to free up credit are working.
The Council of Mortgage Lenders (CML) recently stated that gross mortgage lending totalled 12.9 billion pounds in November, just up from £12.8 billion in October, but lower than the £13.3 billion reported a year earlier.
It appears then that many banks intend to significantly increase mortgage lending over the next three months, helped by cheaper funding available under the Funding for Lending scheme. Banks are also seeking to boost market share and some are looking to take on more risk.
In its quarterly lender survey, the central bank said that the availability of credit to households ‘increased significantly’ in the three months to mid-December 2012, with ‘a further significant increase’ expected in the coming quarter.
Banks and building societies also said to be increasing lending to borrowers with smaller deposits, and said they were planning to increase their maximum loan to values (LTV) in what will come as a welcome move for those struggling to get on the housing ladder.
Vicky Redwood at Capital Economics said: “We should not get too carried away. Whether banks actually follow through on these intentions to boost the supply of credit remains to be seen”.
Although the Council of Mortgage Lenders (CML) chief economist Bob Pannell stated that “in our view the Funding for Lending Scheme now has the potential to underpin a modest pick-up in mortgage lending activity,”
The Royal Institute of Chartered Surveyors (RICS) also admitted that the Funding for Lending Scheme is “beginning to bear fruit for potential buyers”. However, it also warned that the macro economic picture continues to weigh heavy on the market and continues to prevent any really significant boost in activity.
The Council of Mortgage Lenders (CML) therefore expects lending to pick up next year, but it remains unsure how sustainable that increase will be looking further ahead.
Recent data has shown that mortgage approvals rose to 54,000 in November 2012, whilst this is a significant rise it is still only about half the monthly average of 103,000 seen in the decade to 2007 before the financial crisis.
Paul Smee, the Council of Mortgage Lenders (CML) director general added “Our forecasts point towards a market that will both grow and improve in 2013. Sustainable growth will characterise the market of the future”.
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