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UK residential mortgage lending made a dramatic recovery in May 2012 after the sharp decline caused by the end of the stamp duty concession at the end of March.

The Council for Mortgage Lenders (CML) claimed that the amount of residential mortgage loans advanced to property buyers increased by 33% from in April 2012 to 48,300 in May 2012 resulting in overall mortgage lending being 25% higher than at the same point in 2011

The CML put the rise in first-time buyer activity down to the market bouncing back from the temporary slump that came with the reintroduction of 1% stamp duty at the end of March 2012.

CML’s Director General, Paul Smee, said: “The slump following the end of the stamp duty concession seems to have been short-lived. Lending is similar to late 2011 levels and showing a healthy improvement on the same time last year.”

Despite some 18,100 first-time buyer mortgage loans worth £2.3 Billion (GBP) increasing by more than 20% compared with May 2011.

Mr Smee urged caution amid the ongoing Eurozone crisis stating “Economic uncertainty could affect both the supply of mortgage lending and consumer confidence and we still anticipate a challenging lending environment for the rest of the year.”

Gross mortgage lending declined to an estimated £10.2 Billion (GBP) in April 2012.

Mortgage lending fell by 19% from £12.6 Billion (GBP) in March 2012 but was 2% higher than the total of £10.0 Billion (GBP) in April 2011, according to the Council of Mortgage Lenders.

CML chief economist Bob Pannell comments:“Mortgage lending activity has been relatively buoyant in recent months, with stronger lending for house purchase underpinning the more upbeat lending picture. The underlying picture is likely to be a bit stronger than the April figure suggests, because some first-time buyers are likely to have brought forward their transactions to March 2012 to take advantage of the stamp duty concession that was coming to an end in March 2012. Eurozone developments remain highly uncertain and have the potential to undermine UK economic prospects and conditions in our housing and mortgage markets. The underlying picture is likely to be one of easing momentum in the housing market, but with potential for a sharper downwards correction on bad Eurozone news.”

Institutional Investment is needed in UK Buy To Let Sector

Institutional Investment is needed in UK Buy To Let Sector

The Council of Mortgage Lenders, (CML), think the coalition Government’s Chancellor of the Exchequer, George Osborne should be doing more to encourage institutional investors to take a stake in Buy To Let property in the upcoming Budget.

The Council of Mortgage Lenders are the trade body for all the UK’s major bank and building society residential mortgage lenders.

The CML claim encouraging pension funds and corporate investors is a neglected policy that could provide the cash for more UK homes that can be made available to rent.

The suggestion is part of a wide-ranging Budget review aimed at influencing the Chancellor to ease the mortgage market. The submission also criticises current housing policies, including:

• Stamp duty holidays for first time buyers, which the CML claims creates a boom and bust market around deadline dates
• Paying housing benefits direct to claimants may damage landlord cash flows and lead to unnecessary mortgage arrears and repossessions
• Making better use of housing stock as, the CML states, most of the homes available over the next 20 years have already been built

The CML has told the Chancellor that given the vulnerabilities and uncertainties, it is important to make sure that all avenues, for strengthening and diversifying funding structures, have been explored.

The CML have also noted that the government continues to explore the obstacles to greater institutional investment in the supply of private rental property, but, strangely, the further scope for promoting domestic institutional investor interest in mortgage assets seems to be a neglected area of policy.

The Budget report also points out that UK banks and building societies rely heavily on raising funds from wholesale markets which are currently challenged by the Eurozone debt problems.

“Funding costs remain higher than a year ago, and the UK remains vulnerable to future eurozone developments. Given that current market conditions are somewhat fragile, it is very important that other government policies do not undermine housing market sentiment more generally. We believe that there are a few areas where policies are not as well aligned as they could be.” says the CML.

The CML’s calls echo the sentiment of many existing UK landlords who have had to search for a variety of additional landlord services such as insurance, tenant referencing and tenant eviction services from private sector specialist suppliers, in order to remain in a profitable situation.

With institutional investment into the UK private rented sector (PRS) specialist products and services for landlords will be enhanced for the corporate market and derivatives would be more affordable and even more readily available.

Buy-To-Let is Booming in the UK

Buy-To-Let property is Booming in the UK

The Council of Mortgage Lenders (CML), have revealed that the UK is in the grip of a Buy-To-Let boom that shows no signs of stopping, as property investors snap up UK property worth £160 Billion (GBP).

The CML state that there are a record 1.4 Million Landlord loans, valued at almost £160 Billion (GBP), currently invested into UK Private Rented Sector (PRS), residential properties.

It appears that property investors have been keen to cash in on the soaring PRS rental demand and have been snapping up large quantities of residential properties.

The rental demand exists because many people still feel that they can’t afford to buy a home of their own and those who want to buy, are forced to rent whilst saving huge cash amounts required for the deposit for a property purchase.

With income from savings wiped out by low interest rates, mortgage repayments have become cheaper and landlord numbers have increased.

With Private Rented Sector (PRS), rents close to all-time highs across the country, there has never been a better time to get into Buy-To-Let!

Owning a residential property that is suitable for buy-to-let (BTL), that produces a regular rental income can be a real money-spinner for both amateur and professional landlords.

In London the average rent is approximately £1000 pcm, however in the rest of the UK, the average rent is only £711 per month.

According to the CML, in 2001, when the UK Buy-To-Let market was still in its infancy, landlords had obtained 185,000 loans to invest in rental properties.

Today, landlords have taken out 1.39 Million loans, worth about £160 Billion (GBP), to spend on their property empires, with an estimated 84,000 homes bought using specialist Buy-To-Let mortgages last year alone.

Critics have claimed that the UK buy-to-let market has forced property prices up to levels which many first-time buyers cannot afford.

Although buy-to-let loan numbers have ballooned, the number of mortgages to first-time buyers has taken a dramatic nose-dive.

Last year, according to lettings agent Countrywide, about 275,000 new tenants registered their interest in private rental accommodation – a 24 per cent increase on the previous year.

It said that a typical tenant is a couple under the age of 35, although the number of families is rising.

During the past ten years, the number of young people getting on the property ladder has collapsed from about 500,000 each year to just 200,000 and the lack of available finance, high deposits and employment stability being blamed for the fall in applicants .

Read the full Daily Mail article here

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According to the Council of Mortgage Lenders, (CML) gross mortgage lending in December 2011 was an estimated £11.7 Billion (GBP).

That is still 12% short of the £13.2 Billion (GBP) recorded in November 2011 but is actually up 12% when viewed on a year-on-year basis.

In fact UK mortgage lending increased to around £140 Billion (GBP) in 2011, compared with £136 Billion in 2010 and December 2011 was the fifth month in a row to show annual growth in mortgage lending, with 2011′s fourth quarter total of £37.3 Billion (GBP) up 11% on the final 3 months of 2010.

However, the CML expects the UK housing market to experience a weak first half of 2012 and warns that the increase is from a low base with challenging economic prospects,.

The Eurozone crisis, higher funding costs for lenders and the troubled state of household finances are all likely to impact on the UK housing market.

Bob Pannell, CML’s Chief Economist, said “There is a glimmer of light ahead for households in that real incomes could stabilise and perhaps even start rising by the end of the year. But, continuing Eurozone problems mean that mortgage funding prospects are uncertain, so overall UK mortgage market conditions for the year ahead remain difficult to call.”

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