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mortgage lending market

mortgage lending market

News said earlier, mortgage lending continues to rise according to the latest figures from the Council of Mortgage Lenders (CML). Gross lending in July stood at £16bn, 26% higher than in June, though still more than a third lower than in July last year. Mortgage lending, house sales and property prices have all picked up in the past few months after a dramatic slump caused by the banking crisis. But the CML warned the housing market would slow down again later this year.

The latest “Trends in Lending” report, from the Bank of England, said there had been little sign of this rationing of the home loan market easing up. The Bank’s report pointed out that 90% mortgages had become much more expensive, relative to 75% mortgages, than they were before the banking crisis started in 2007. That was because of the increased risk of default associated with the larger LTV mortgages. But then, they said some lenders had indicated to it that if the risk of further house price falls eased off, they might make their 90% mortgages slightly less expensive compared to their 75% loans.

The news also sighted that the improvement in mortgage lending in July was due to the rise in house buying usually seen during the summer. But it warned against exaggerating the improvement. They also pointed out that lending in July was still at its lowest for that month since 2001 and far lower than the July average of £27bn recorded in the previous seven years. The bounce-back in activity from the extreme weakness around the turn of the year, coinciding with a seasonal bounce is limited in how far it can go against the current backdrop.

On the other hand, Andrew Montlake of mortgage broker Coreco said: “These latest figures support the general feeling that some parts of the lending market are slowly easing, particularly in the large mortgage loan sector however, there is still a big squeeze in terms of availability and competitive mortgage rates in the wider market, despite buyer demand being strong”.

3 Comments so far »

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