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Mortgages for private property purchases and Buy To Let landlords and business credit are becoming more widely available, thanks in part to the Government’s financial initiative, the Funding for Lending Scheme.

Mortgages More Widely Available in 2013

Mortgages More Widely Available in 2013

An indicator that moves to ease lending restrictions and free up credit appear to be working.

The £80 Billion (GBP) Government scheme, launched in August 2012 was intended to boost the flow of credit to private households and businesses.

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New research from the Centre for Economics and Business Research (CEBR) shows UK property prices rising by 0.8% in 2012.

CEBR confirm a view that has remained fairly consistent for the last 3 years, that low interest rates and an increasing availability of mortgage products suitable for First Time Buyers (FTB’s), next time buyers and Buy To Let Landlords will help UK residential property prices creep up over the 2012-2016 period, reaching pre-recession levels in the second quarter of 2016.

The CEBR based its forecasts on a mix of micro and macro factors.

  • The key micro factor is the shortage of housing relative to potential household formation.
  • The key new micro issue is the changes in the planning regulations re-announced in the Budget.

These are likely gradually to boost the supply of housing and will constrain the gentle rise in house prices.

The key macro factors are

  • Affordability
  • Employment
  • Mortgage availability

The first of these will be slightly positive, the second slightly negative and the third increasingly positive.

The CEBR expect the mortgage famine to ease gradually as further quantitative easing flows through the economy and as banks recapitalise themselves.

“House prices have been pretty stable over the past two years” says Shehan Mohamed, main author of this report “Lending for housing was £74.5 billion in 2011 and we forecast that this will rise to £109.9 billion by 2016”.

CEBR’s regional house price analysis, also included in the report, shows house prices are likely to continue to rise more quickly in the London and the South East, though the gap in house price inflation with the rest of the country is likely to close because of the 7% stamp duty and the heavy taxation on corporate home ownership announced in the Budget and because of the non-recurrence of special factors like the Arab Spring and the euro crisis which boosted the London market in 2011.

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