Property mortgage lending slips back in the UK despite govt stimulus schemes

Gross mortgage lending in the UK in August was £12.6 billion, some 1% lower than July and 4% below a year ago, the latests figures from the Council of Mortgag Lenders published today (Thursday 20 September) show.

CML chief economist Bob Pannell conceded that the market is far from strong and said it is hoped that the government’s NewBuy scheme which was launched six months ago and the Funding for Lending Scheme launched a month ago should start helping to boost the number of buyers soon. ‘We expect to see stronger take-up of NewBuy over the coming months, helped by a concerted marketing effort by builders and the recently launched Funding for Lending Scheme, which has prompted reductions in NewBuy mortgage rates. Both factors should stimulate buyer interest,’ he said. ‘The Funding for Lending Scheme is a bold move that has the potential to greatly influence the course of the housing market over the next year or so. While not a panacea for all housing market problems, the scheme does offer the potential to improve the lending environment. Unfortunately, it will be towards the end of the year before any initial assessment of its impact can be reached,’ he added. The poor mortgage market is acting as a break on buying activity as those without substantial equity or the ability to pay cash are struggling to get a loan, according to David Brown, commercial director of LSL Property Services. ‘The Funding for Lending scheme should make life easier for lenders to provide cheaper finance for those buying their first home, but we’ve yet to see its influence in the monthly lending figures, and the current level of lending is more reflective of lenders’ concerns over their balance sheets and exposure to the Eurozone crisis,’ he said. ‘However, the scheme will need to drive a drastic improvement in the number of first time buyers able to access cheaper finance if we are to see a lessening of pressure on the private rented sector,’ he added. Paul Hunt, managing director of Phoebus Software, believes that the current dreary economic landscape is keeping the rate of housing activity slow and subdued, as consumer confidence makes it tough for the property market to return to healthier levels. ‘However lenders have proved to be of vital importance in making the market progress. As the economy remains lifeless, they have helped overcome potential crisis by displaying a willingness to lend through the provision of innovative products and a positive approach to borrowers finances,’ he said. ‘The government’s £80 billion Funding for Lending Scheme, launched this month and the latest New Buy Scheme should make mortgage products more attractive and hopefully will mean borrowing starts to flow again,’ he added.