Houses sold better than expected in 2013, boosting mortgage lending by 30 per cent since last year and far exceeding forecasted rates. The figures, provided by the Council of Mortgage Lenders (CML), suggest continued growth in the new year, with lending hitting GBP 200 billion. At the moment, experts are predicting a rise of almost 18 per cent in 2014.
A year ago, the CML forecast lending to hit GBP 156 billion, but at the moment, it's set to reach GBP 170 billion - nine per cent higher than originally predicted. "That is still a far cry from the GBP 363 billion experienced at the height of the lending boom in 2007," warned chief economist Bob Pannell. Ashley Brown, director of broker Moneysprite, agreed: "It feels like a booming market but we are still way below the historical norm. That's how bad things got."
Month-on-month, lending has fallen since autumn, with rates dropping four per cent from October to November. Though experts do predict a dip in lending rates in the run up to New Year's Eve, mortgage lending is forecast to soar in early January, as pent-up demand from first-time buyers hits the market. As changes to the Funding for Lending Scheme come into play, residential mortgages may surge even higher with lenders trying to offset any slowdown.
In fact, market commentators like Andy Frankish, new homes director at the Mortgage Advice Bureau, are predicting a bullish market for the foreseeable future, as the current rise in lending is setting "a positive tone for 2014".
Mr Frankish said that a release of pent-up demand is already affecting the market, "and there is plenty more to come as high loan to value lending picks up". He added: "All in all, it adds up to greater movement and fluidity in the market which can free up first-time buyer properties as existing owners move up the housing ladder." Many experts attribute the increased gross lending figures to the success of the Help to Buy Scheme - a programme which has allowed many first-time buyers invest in property and get their feet on the property ladder.
Is Help to Buy really the fix the market needs? Take a look here and decide for yourself.
- Monday 06 January 2014