by Mark Johnston
Mortgage Lending Remains Subdued.
The Government seems committed to its policy of doing more to encourage lending.
David Newnes, director of LSL Property Services, adds “funding for lending and help to buy are reignited the buyer market”.
Research shows that Mortgage approvals have jumped 33 per cent year on year.
Dragonfly Property Finance chief executive Jonathan Samuels say that “the jump in mortgage approvals year on year underlined just how far the market had moved on.”
Housing market analysis from Capital Economics, a think tank, reveals that the number of mortgages approved by lenders for house purchases in June 2013 increased by around 987 to 37,278.
Lenders, estate agents and property websites have all been reporting a pick up in recent months and house prices have been increasing more strongly this year than many experts had predicted.
The Council of Mortgage Lenders (CML) data for June has gross lending at around £15 billion, this is 2 per cent up from £14.7 billion in May and 26 per cent higher than the total of £11.9 billion in June 2012.
Also according to the bank of England’s data for May 2013 net lending was under £1 billion.
Other data, which excludes mutuals such as the Nationwide building society who have been actively growing their loan books, reveals that gross mortgage borrowing for June this year was around £8.9 billion and this is slightly higher than May’s £8.7 billion figure, however it is still outweighed by the £9.1billion repayment of borrowers capital.
While gross mortgage lending has risen over the past six months, the trend for net lending has remained more subdued.
So it seems then while schemes like the funding for lending scheme and the help to buy initiative there is still reluctance from consumers to take on any extra borrowing partly due to the fact there is still a degree of uncertainty in the job front.
It also appears that despite the housing market uplift, mortgage lending is still ‘subdued’ overall as people are now continuing to make high repayments in the low interest rate environment.
Low mortgage rates and poor returns on savings have made it more attractive for home owners to use any spare cash to try to pay down their mortgages and reduce what they owe.
According to figures from the British Bankers Association (BBA), Britain’s overall mortgage debt continues to shrink as many home owners repay more than they borrow.
Jonathan Harris, director of mortgage broker Anderson Harris, suggests “borrowers who can now afford to overpay on their mortgage are taking advantage of the current low interest rates on offer”.
So in conclusion experts suggest that Pre-2007, before the financial crisis, people would often borrow as much as they could, but now it seems they are borrowing what they need. Thus meaning that the mindset of borrowers has changed and that can be no bad thing!
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