Mortgage Lending Up £1.7 Billion (GBP)

Mortgage Lending Up £1.7 Billion (GBP)

UK Mortgage Lending Up £1.7 Billion (GBP)

The latest mortgage lending figures released by the Bank of England show that lending secured on residential property increased by £1.7 Billion (GBP) in December 2013, compared to the average monthly increase of £1.1Billion (GBP) observed during the previous six months of the year.

The increase is generally being credited to the success of the Government’s Help-To-Buy scheme, with London leading the way on residential property price rises, but what is the real situation affecting the UK?

Director of e.surv chartered surveyors, Richard Sexton, explained: “Mortgage lending in the UK is improving at lightning-speed. Lending has hit a six year high, as banks continue to offer cheap loans and interest rates, and repayments remain low. Mortgage lenders have dramatically increased lending to borrowers with smaller deposits, which has encouraged more first-time buyers to the market. And the government’s Help-To-Buy scheme has given consumers a huge confidence boost, which has increased lending volumes further. But the heart of the market remains in London and the South East. In other areas of the country the recovery is far slower. House prices may be increasing quickly, particularly in the capital, but it’s important not to withdraw Help-To-Buy too soon. In London, buyers need the scheme to get on the ladder. In many other areas, wage growth has been comatose since the economic crash, would-be property buyers simply don’t have enough income to save for a deposit. Building more houses would be a far more prudent approach to capping price rises than trimming down the Help-To-Buy scheme prematurely.”So it is still good news for first time buyers, as the Help-To-Buy scheme will continue for the next few months, but what about the Buy-To-Let market?

Managing Director of Mortgages for Business, David Whittaker, commented: “The economic recovery and relatively cheap mortgage deals have allowed more first time buyers to get onto the property ladder in recent months, but for most, rising prices and a lagging wage growth will keep owning a home from becoming reality for a while yet. Housing remains less affordable than before the recession when compared to wages, and serious pressure continues to be exerted on the rental market to provide enough homes. Landlords are already plugging some of the gaps in the supply of UK housing as growing numbers make use of the equity they’ve built over the last few years to expand their rental property portfolios, renovate existing properties and create new developments.  Last year, buy-to-let mortgage rates were pegged back by strong competition between mortgage lenders. However, as the cost of funds continues to rise, it is only a matter of time before lenders have to adjust pricing upwards to ease squeezed margins.  Landlords looking for finance today would do well to consider five year fixed rates now before the increases start.”

Landlords looking to expand rental property portfolios and property investors looking to cash in on the current demand should act quickly to avoid paying through the nose for mortgage funding.

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