Mortgage lending at highest level since 2008
Thu 21 Nov 2013
The latest figures from the Council of Mortgage Lenders (CML) show £17.6bn of lending last month, just £1bn short of the 2008 total.
Bob Pannell, the CML's chief economist, predicted that this upturn is just the start as lenders relax their criteria.
“Housing activity is set to strengthen further in the short-term, and to contribute materially to overall economic growth," he added.
“Combined with the Bank of England’s recent optimism about the economy, this has led some commentators to speculate that an early rate rise may be on the cards. We do not currently share this view, which we believe underplays the importance that the monetary policy committee attaches to a secure recovery before raising rates."
The increase in the supply of mortgage finance and the pace of price rises in certain areas has concerned some commentators, who are worried that the property market may be attempting to run before it can walk.
However Stephen Smith, director of housing at Legal & General, said that people should not be "nervous" as the market has been very flat since the financial crisis.
"While we must be careful not to repeat mistakes made in the past the fact remains there are many responsible and capable borrowers currently being priced out of home ownership by the requirement for sky high deposits and making mortgage finance available to these responsible individuals is no bad thing."
"The major problem is not increasing the supply of mortgage lending but rather the chronic undersupply of suitable housing across the UK. It’s vital that more homes are built to meet the undoubted demand," he continued.
"This is more likely to upset the equilibrium of the housing market rather than lending at 95 per cent loan-to-values to financially responsible borrowers.”
The second phase of the government's Help to Buy scheme, which encourages lenders to advance 95 per cent mortgages, is unlikely to have had an impact on the lending figures yet. Analysts expect it to give a big boost to the sector though, as it will open up the market to more first-time buyers.
October 2013View older stories >
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