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Tuesday, January 7, 2014

UK residential property lending increased by 30% annually

By Rob Steen

According to the latest estimate from the Council of Mortgage Lenders, UK residential property lending is up by 30% year on year. Gross lending for the year 2013 is set to reach £170 million which is a higher figure than predicted. Although the £17 billion of gross lending in November is 4% lower than in October, it is still a higher figure than the £13 billion seen in November 2012. Chief economist at the Council for Mortgage Lenders Bob Pannell states that the lending this year will be higher than the original forecast of £156 billion but this figure is still lower than the £363 billion seen in 2007.

The next two years are likely to see further increases in lending but the total figures may not exceed £200 billion per year. However, a positive tone has been set for 2014 with many lenders delivering larger numbers of loans than predicted at the start of the year. Andy Frankish, new homes director at the Mortgage Advice Bureau states that there has been significant interest from first time buyers and second steppers and this could increase considerably due to the number of lenders offering high LTV mortgages. Greater movement in the market is expected with many landlords selling their property fast. This will free up many properties for first time buyers as many begin to move up the ladder.

Growth in lending figures occurred even before phase two of the Help to Buy scheme took place therefore figures look likely to increase in the New Year. More than 12,000 mortgage products were available to buyers in November which is a first in many years, therefore there are more options for those wishing to step on the property ladder. Managing director of First Mortgage Ian McGrail states that many first time buyers are making use of the Help to BUY scheme to help get onto the property ladder for the first time. However, it is unclear whether this upward trend will continue or whether the withdrawal of the Funding for Lending scheme will have an adverse impact. Despite this, the increase in home loans shows that the economy is on its way to recovery. It is hoped that Help to Buy will not be withdrawn as it has helped many who struggle to save for the traditionally high deposits.

Lenders are in fierce competition with one another therefore many are cutting back rates and helping lower equity buyers get their foot on the ladder. Due to the end of the Funding for Lending scheme, the housing market will be focussed on how the Help to Buy scheme will affect the market in 2014. More competitive mortgage loan rates look set to enter the market therefore lending looks set to increase further. 

Peter Williams, executive director of the Intermediary Mortgage Lenders Association, states that these latest figures are an indication of how mortgage lending has changed over 2013. Mortgage arrears and repossessions have fallen indicating a more responsible lending structure with many new rules coming into force in the New Year.

About the author: Rob Steen is a freelance copywriter who specialises in the property market.
He sometimes writes for the Property Buyer website.

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