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Loans for UK homes from banks and building societies increased in 2012, data shows

The number of approvals for remortgaging decreased slightly in November but was still above the previous six month average, the data also shows.

The mortgage industry welcomed the figures, which also showed that there was almost a billion pounds of extra lending in the first four months of the government’s Funding for Lending Scheme.

‘It is a sure sign that a steady momentum is building in the market. With £6 billion of funding made available for house purchases by the major lenders for the second month running, even at this relatively early stage, supply and demand are both moving in the right direction,’ said Peter Williams, executive director of the Intermediary Mortgage Lenders Association.

‘Given the optimistic tone of the Bank’s Credit Conditions Survey, we anticipate the continuing revival of purchase and remortgage lending in 2013. Brokers will certainly be kept busy in the coming months as lenders compete for business and consider how to address demand for higher loan to value (LTV) products,’ he added.

According to Brian Murphy, head of lending at the Mortgage Advice Bureau, there is a positive outlook for the mortgage market in 2013. ‘Cheaper funding is clearly starting to have the desired impact, and as funds continue to be accessed from agreed loans, we can expect to see more of the same as the Funding for Lending Scheme matures,’ he said.

MAB’s National Mortgage Index for November showed that borrowers were enjoying extremely attractive rates on both purchase and remortgage applications, making fixed rate deals the obvious choice for the vast majority (90%) of consumers.
‘The fact that lenders are anticipating an increase in maximum loan to value ratios will be a particularly welcome boost for anyone asking how they can gain a foothold on the property ladder in the current climate,’ he added.

Meanwhile, figures from the Building Societies Association (BSA) also show that loans are on an upward trend. Building societies and other mutual lenders made £2.7 billion of mortgage loans in November 2012, up 9% compared to November 2011.
This means that mutual lenders accounted for 21% of gross mortgage lending in the UK in November 2012.

In the first eleven months of 2012, mutuals lent £28.3 billion of mortgages, accounting for 22% of the whole market. In this period, mutual lenders made over 61,000 loans to first time buyers, up from 36,000 loans in the same period in 2011.

Net mortgage lending, gross lending minus repayments, by mutuals was £0.6 billion in November 2012. In the first 11 months of 2012 net lending by mutuals amounted to £6.2 billion, out of £7.2 billion across the market as a whole over this period.
Looking ahead to future completions, mutuals approved 24,800 new mortgage loans in November 2012, 19% higher than the 20,800 loans approved in November 2011.

‘Mortgage lending by building societies and other mutuals increased substantially in 2012 based on the data we have published today for the first 11 months of the year. Mutual lenders accounted for a greater share of total gross lending in this period than over the equivalent period in 2011, showing that the sector has stepped up to the plat and supported many of those looking to purchase a home,’ said Paul Broadhead, head of mortgage policy at the BSA.

‘Importantly, this new lending has been broadly spread, including many first time buyers and borrowers with lower levels of deposit. In the first 11 months of 2012, over 61,000 loans were made by mutuals to help people buy their first home, compared to 36,000 in the same period a year earlier,’ he explained.

‘Mutual lenders continue to offer some of the most competitive mortgages available on the market. The average mortgage rate available on new loans from the sector was 4.09% in November, well under the 4.32% average on offer across the market as a whole,’ he added.

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