UK: Mortgage lenders see business surge

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Property for sale - Credit: nick strugnell

An estimated £15 billion worth of mortgages was advanced in June, marking the best month seen since October 2008, the Council of Mortgage Lenders (CML) said.

About £42 billion worth of deals were handed out between April and June, which is also the highest quarterly estimate seen since the last three months of 2008.

Mortgage lending last month was about 2% higher than May and up by one quarter (26%) compared with same month a year ago.

CML chief economist Bob Pannell said the signs of improvement in the housing market look “set to continue for the immediate future”.

He said: “Improvements in the cost and availability of mortgage credit are underpinning a meaningful recovery in the housing market.

“In recent months, we have seen the strongest performance for mortgage lending since 2008.”

Last week the CML reported that first-time buyer numbers had lifted to their highest levels in five and a half years amid better access to mortgages. People taking their first step on the property ladder are also needing to put lower deposits down, as lenders’ “risk appetite” returns.

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Banks, building societies, estate agents and property websites have all been reporting signs of more bustling activity in recent months as confidence blossoms.

The strength of the recent upswing has taken several experts by surprise and some have revised their predictions for house price rises over 2013 upwards.

Property search website Rightmove said earlier this week that house sellers’ asking prices scored a hat-trick of record highs in May, June, and July this year, and other studies have shown that sellers are feeling more confident about sticking close to their asking prices as more would-be buyers enter the market.

Rightmove now expects to see a 4% increase in house prices over the course of 2013, instead of a 2% rise penciled in at the start of the year.

Much of the recent housing market lift has been put down to wider access to mortgages and lenders competing harder to offer cheaper and more innovative deals, following the launch of a Government scheme called Funding for Lending last year, which gives lenders access to cheap finance to help borrowers.

The average five-year fixed-rate deal has now fallen below 4% across the entire mortgage market, to an all-time low of 3.87%, according to financial information website Moneyfacts.

Initiatives such as NewBuy and Help to Buy have also been introduced to give a helping hand to people with smaller mortgage deposits.

Mr Pannell cautioned that despite the recent upturn in first-time buyer numbers, activity is still at “barely half” the rates it was a decade ago and remains below “what might be considered normal levels”.