Mortgage Lending in November 2011

by Mark Johnston

Mortgages are the key to the property market, the vast majority of buyers can not purchase a property with out one!

Lending responsibly has never been more important as the market remains challenging, with household incomes ever more squeezed. Therefore lenders are actively trying to help consumers both by conventional means and by new options, such as equity loan schemes.

Mortgage lending in general has been subdued through out the year.

In November however mortgage approvals have jumped to the highest level for 2 years. Purchase approvals rose from 52,743 in October to 54,658 in November, an increase of 4%.

These figures were also 15% higher than the number approved in November 2010. Mortgages with deposits of less than 15% accounted for 13% of all lending in November.

Many experts believe that this increase was triggered by the loosest lending conditions seen since October 2007.

According to the latest mortgage monitor from e.surv chartered surveyors, first time buyers and buy to let landlords found it easier to obtain mortgages for home purchases in November.

The banks have been focusing their lending on specific groups, particularly buy to let investors, but this is the first time that they appear to have increased their lending to first time buyers in any notable sort of volume.

Paul Broadhead of the Building Societies Association (BSA) said “mutual lenders saw the biggest increase in gross lending since January 2010, 20% up on the same time last year. More than 1 in 5 mortgages were to first time buyers”.

According to the Council of Mortgage Lenders (CML), mortgage lending increased 9.8% in the year to October 2011 and has risen for the last 3 consecutive months.

A mortgage expert at think money believes “it is great news for potential buyers that mortgage lending appears to be improving to this extent. Mortgage rates are still very low, meaning it could be an ideal time for people thinking about buying a home to make a move”.

Even with figures such as these the Council of Mortgage Lenders (CML) has still down graded their forecasts for gross mortgage lending for both this year and the next. It previously forecast lending of £140 billion for 2011 but has now lowered this to £138 billion.

It forecast for lending in 2012 was £150 billion this too has been ‘slashed’ to £133 billion, these reductions it says represents the weaker economic backdrop that now seems likely.

Bob Pannell, chief economist at the Council of Mortgage Lenders (CML) says that “lenders face tough conditions in the wholesale funding market as a knock on effect of sovereign debt concerns and this could have a negative impact on the cost and availability of mortgages next year”.

Paul Smee, the Council of Mortgage Lenders (CML) director general added to this by saying; “it is possible that we will see signs of increased activity by first time buyers in the early months of next year, as we approach the end of the governments stamp duty concessions at the end of March”.

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