Categories: Mortgages
Topics: CML| Gross Mortgage Lending
Gross mortgage lending fell 13% to an estimated £9.2bn in January from £10.6bn in December, as the market shows little signs of rebounding, according to the CML.
Its latest figures revealed lending in January was up 5% compared to the same month in 2010, which is the first year-on-year increase since August 2010.
However, the CML points out comparisons with the beginning of last year are distorted by the continued effects of the Stamp Duty holiday that finished at the end of 2009.
Peter Charles, economist at the CML, says: "The Bank of England's inflation report noted that the UK banks face a significant funding challenge over the next couple of years.
"In total, including funding supported by the public support schemes, around £400bn to £500bn of wholesale term debt is due to mature by the end of 2012.
"This implies that, even in the unlikely event of a marked upturn in mortgage demand, the level of activity in the mortgage market can be expected to remain constrained."
He says the availability of funding for mortgages should improve to more normal levels as the financial market stabilises.
However, Charles adds: "The unprecedented expansion of wholesale funding, and hence mortgage lending, experienced in the mid-2000s is unlikely to return."
In the CML's latest market commentary, Charles notes 2010's figures for transactions, house price growth, gross and net mortgage lending all pointed towards a stabilising market with no evidence for significant change in 2011.
He says: "The lack of impetus in the mortgage market reflects the sluggish state of the economy as a whole.
"While the unexpected fall in GDP in the fourth quarter of last year can be explained by the impact of the freezing weather through most of December, the signs from the early weeks of the new year are that there will be little rebound in activity in Q1 2011."
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Lending Criteria at fault
I do not think interest rates have anything to do with the low mortgage lending as i can remember when interest rates were 15% and one of my clients said to me he wished he had kept his fixed rate 6% this was over 20 yrs ago, no the problem is and always will be that you have to have first time buyers to start the whole thing of and they are being asked to put 25% deposits, which in most cases is not going to happen unless parents help out and not all parents have that type of lump sum to give, they could however help out with monthly payments or be part of the mortgage, if only building societies would bring back that scheme, why is it that building societies seem to charge higher interest rates for first time buyers on the basis that there is a higher risk, they increase the risk by overcharging them, why not make it more affordable for them and the whole market would start to pick, as the government say they should start lending again, money needs to move around not stay in the bank vaults, epople need to prioritise there income and they first one is a roof over there head, and food on the table everything else is a bonus.
Posted by: Geoff
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interest rate rises
what nobody seems to mention - maybe not wanting to create a panic - is the fact that thousands of home owners are hanging onto their homes by their fingertips - and that's with interest rates at an all time low. When the Bof E raise rates to counter the inflation caused mainly by government policy vat increases, fuel duty etc those thousands of homes will be re-possessed and prices will slump, demand will drop as less are able to afford martgages and then we may see the REAL housing crisis that's been waiting to happen for 2/3 years now.
Posted by: Andy Stronach