The Council of Mortgage Lenders estimates that total gross mortgage lending in July increased to £16.6 billion, a rise of 12% from £14.8 billion in June and 29% higher than the total of £12.9 billion in July last year.
‘An improvement in sentiment and activity continues to show in the UK housing and mortgage markets, with a more positive picture also starting to emerge in the economy,’ said CML market and data analyst Caroline Purdey.
‘Our forward estimate of gross mortgage lending in July reinforces a growing evidence base of a strengthening in the housing and mortgage markets,’ she added.
According to Paul Hunt, managing director of Phoebus Software, the rejuvenated mortgage market is gaining strength month by month and there’s been a pick up in confidence in the property sector. ‘Optimism is growing rapidly as gross mortgage lending has grown substantially to the highest level we’ve seen since October 2008,’ he said.
‘And first time buyer lending is at its highest since the banking crisis. The Funding for Lending scheme has worked wonders in supporting mortgage availability and has boosted cheaper funding as banks and building societies have been able to lower their costs,’ he pointed out.
‘At the same time Help to Buy has emerged as another incentive for banks to increase high LTV lending even more. Mortgage rates are at record lows and lenders have helped transform conditions for a range of buyers thanks to their proactive approach to lending,’ he added.
Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), believes it is a sure sign that the housing market has turned a corner. ‘With the Funding for Lending Scheme in its second year, there is a real sense of expectation among lenders that the second half of this year will see even greater activity in the market. Indeed gross lending for the first six months now stands at over £75 billion. Given the third quarter is typically the strongest we might reasonably expect gross lending for 2013 to exceed £160 billion, sharply up on the £142.5 billion in 2012,’ he said.
‘As the market strengthens it is also noticeable that more consumers are turning to brokers for advice about the range of borrowing options available. This is sensible because of the new MMR compliant requirements lenders are introducing in advance of April 2014. Applications often fail because of tighter requirements and brokers are expert in knowing how best to assemble the information and the requirements of specific lenders,’ he explained.
‘A lot is riding on the Help to Buy mortgage guarantee to break down the deposit barrier, but with an increasingly diverse range of options available, expert guidance can often help consumers find a mortgage to suit their needs,’ he added.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), pointed out that borrowers also benefited from a boom in product choice as with over 10,000 products on offer for the first time since the financial crash, consumers were spoilt for choice in July.
‘Additional funding through government initiatives has caused lenders to compete for business in order to catch ambitious lending targets. Since the start of the Funding for Lending Scheme began rates have fallen by one percentage point across two, three and five year fixes. The market is certainly ripe for picking, with the best choice of products and deals for years. Investing time to weigh up the options can really pay off in the long term,’ he said.
Simon Crone, vice president commercial for Mortgage Insurance Europe at Genworth, said that amid all the excitement, it’s worth remembering that the figures are improving from a historically modest base and that we are still some way short of the activity levels witnessed before the global financial crisis.
‘While it is encouraging that lenders and borrowers are regaining some of the confidence that was eroded over the past few years, it is also worth bearing in mind that mortgage activity is still being artificially supported by initiatives such as the Funding for Lending scheme,’ he commented.
‘When we are witnessing these kind of figures without ongoing state support is when there will be real cause for celebration. It is heartening that more first time buyers are able to realise their property aspirations, but we must continue to ensure lenders are providing a steady supply of higher LTV mortgages rather than relying on factors such as familial assistance,’ he added.
Life for mortgage borrowers is at its rosiest since the financial crisis, according to David Newnes, director of LSL Property Services and owners of Your Move and Reeds Rains. He said that high LTV lending is at a five year high and this has unlocked the first time buyer market which is starting to unleash a ripple of activity further up the housing market.
‘Help to Buy and Funding for Lending have been key to the recovery. The schemes are encouraging lenders to roll out a wider and cheaper range of products as they try to compete for market share,’ he explained.
‘Borrowers have more choice than at any point since 2008, and lenders are making it substantially easier to access high LTV loans. Cheaper mortgages have transformed buying conditions and opened up the market to a wider range of potential buyers,’ he added.
