UK mortgage loans up 4% in March, but consumers want more access and choice

Gross mortgage lending in the UK was an estimated £15.4 billion in March, some 4% higher than February, according to the latest figures from the Council of Mortgage Lenders.

Gross mortgage lending for the first quarter of this year was therefore an estimated £46.3 billion, a 10% decrease from the last three months of 2013, but a 37% increase on the first quarter of 2013 when it was £33.8 billion.

‘Alongside benign developments in the wider UK economy and the labour market, housing market sentiment continues to strengthen. There are currently no signs of significant market disruption, arising from the imminent application of new lending rules associated with the Mortgage Market Review. While some mortgage lending indicators have eased back gently, this is from the very high levels of recent months,’ said CML chief economist Bob Pannell.

‘The Financial Policy Committee continues to be vigilant to housing market developments, and to remind the market of its ability to act before problems to financial stability set in,’ he added.

David Newnes, director of Your Move and Reeds Rains owned by LSL Property Services, believes there is a greater sense of confidence among both borrowers and lenders. 'A more accessible mortgage market has attracted more first time buyers, and increased higher LTV lending has made aspirations of homeownership a reality for many who have a relatively small deposit saved,' he said.

'However better mortgage product availability should be coupled with an increasing supply of property coming onto the market. House building will therefore need to accelerate to satisfy the growing demand and balance market conditions. With low inflation and a revived jobs market starting to relieve the recent pressure on household finances, more aspiring buyers will be able to save for that all important deposit and access the property ladder while the Help to Buy scheme continues. Increased supply will safeguard the recovery and ease competition for property,' he explained. 

'Lending has carried on since the highs witnessed at the end of last year, as the more stringent checks and thorough measures ushered in by the Mortgage Market Review begin to come into effect. This will ensure that borrowing continues to progress at an orderly and responsible rate. However, it is expected that there may be a small dampening of the market while these changes settle in,' he added. 

But new research suggests that many people in the UK are not confident in the mortgage market and think that it is in poor health with access to loans particularly lacking for aspiring home owners. The survey from Precise Mortgages, a specialist lender, suggests that consumer sentiment lags behind what has become a buoyant market.

Some 29% of those surveyed, including home owners, renters and buy to let landlords, said that access to mortgages has improved but not by enough and the firm said that there is a clear need for the mortgage industry to innovate its product base and meet growing consumer need. Some 46% of respondents think that the mortgage market is in poor health and repairing slowly with access and availability of mortgages for aspiring home owners the apparent root cause for pessimistic sentiment.

The research found that 62% of respondents who aspire to own a home want to buy within the next five years, yet many worry about the barriers they face. Key amongst these findings is the ability to save a large enough deposit which concerns 62%.

More than half, some 53%, of respondents feel that the market continues to favour those with large deposits and 39% say mortgages are too difficult to obtain for first time buyers.

There is also a strong sense that the current mortgage market needs to adapt to keep pace with consumer need and 20% of respondents feel that mortgages are too difficult to access for the self employed or freelancers while a further 19% argued that the mortgage market doesn’t cater well enough to those with blemishes in their credit history.

When it comes to improving the mortgage market, respondents identified improving rates and access as well as considering lending criteria and eligibility on an individual basis as paramount.

While Government initiatives such as Help to Buy have brought a boost for some, almost a quarter, 22%, say they have very little knowledge of it, while 11% believe it is not enough and other innovations are needed to drive market growth.

‘The research presents an interesting conundrum. On the one hand confidence has returned and this is being rightly celebrated across the industry but there appears to be a delay in this buoyancy filtering down to the consumer,’ said Alan Cleary, managing director of Precise Mortgages.

‘Ultimately, the market is there to serve them and yet many of them feel unserved by lenders and concerned that access to the market is denied to them. We have a significant role to play in combating the feeling that mortgages are difficult to obtain, that lenders continue to favour large deposits and are unforgiving of those with credit blemishes or alternative employment histories, perhaps freelance or self employed,’ he pointed out.

‘There are specialist lenders in the market designed to meet this challenge but there is still more to be done across the wider industry to innovate products and ensure they respond to contemporary consumer need. Ensuring that all viable homeowners have access to mortgage products should be the aim of lenders across the board, both to meet home owning aspirations and continue to grow the recovering British economy,’ he added.