East Anglia: Cautious welcome as lenders see strong upturn in home loans

Jon Hall, chief executive, Saffron Building Society

Jon Hall, chief executive, Saffron Building Society - Credit: Archant

Building society bosses in East Anglia remain cautious about the state of the housing market after UK mortgage lenders reported one of their strongest months since 2008.

The Council of Mortgage Lenders (CML) estimates that £12.1billion worth of loans were advanced in April, marking an increase of one fifth (21%) year-on-year.

The uplift is seen as a sign that Government efforts to reinvigorate mortgage borrowing are prompting an upturn in the housing market.

Jon Hall, chief executive of Saffron Building Society, said his business had seen a 22% increase in mortgage lending in April compared to March, but the April figure was on a par with the same month the previous year.

He predicts a long, slow road to recovery, and no quick turnaround for the housing market.

Ipswich Building Society (IBS) chief executive Paul Winter said there were some signs that the Funding for Lending scheme is starting to filter through into mortgage activity but it was “too early to say” if it has had a permanent impact.

“It is pleasing to see the increase in lending to first time buyers who of course are key in getting the market going,” he said.

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“At IBS we have seen more strong demand for mortgages throughout 2013 following a very strong year in 2012.”

Mr Hall said Saffron had also seen a strong 2012 and other businesses were only now catching up with new products similar to those it had already launched.

“Obviously there’s a demand there and an increasing supply of mortgage products,” he said.

“I do think this is more than just a blip in the market.”

But he added: “I think it’s going to take some time. It’s always good to have some positivity. I think consumer confidence is potentially starting to come back. From an economic perspective this is going to be a long, drawn out recovery.

“The housing market has a role to play but for me, more effort needs to be put into building houses.”

It was “unlikely” that a return to pre-Credit Crunch 2008 levels was on the cards, he said.

“I would not predict getting to that point any time,” he said.

However, CML chief economist Bob Pannell said: “The true underlying position is that April is likely to have been one of the strongest months for lending activity since late 2008.”

The findings were released as official figures showed yesterday that house prices rose by 0.4% month-on-month in March to reach £235,000 on average, marking the first monthly increase seen this year. House prices are now 2.7% higher than they were a year ago, following a smaller annual uplift in February, the Office for National Statistics figures showed.

The CML reported an uplift in first-time buyer activity in recent months, helped by various Government schemes designed to make it easier for people to borrow.

The number of mortgages on the market has risen sharply and lenders have slashed their rates since the Government’s Funding for Lending was introduced last August.