The latest figures from The Council of Mortgage Lenders revealed gross mortgage lending for September fell 10 per cent compared to August. Total advances stood at £11.6bn compared to August’s figure of £12.9 bn while year-on-year lending fell 15 per cent when gross lending was 13.7bn in September 2011.
With our glass half full, looking at the third quarter as a whole we can see that lending was up 8 per cent on Q2 2012 but 5 per cent down on where we were a year ago. So is it a case of two steps forward in the short term as we shake off the Olympic slowdown and two steps back if we reflect on things last year?
I agree with the CML view that the Olympics was a possible market ‘distorter’ which contributed to the fall in lending. However, the legacy of the Games is also said to have been partially responsible for a GDP improvement that saw Britain’s output jump one per cent in Q3 2012, which officially lifted our nation out of a recession.
Mortgage headlines of late present a mixed bag of results, which are dividing commentators. Take The Funding for Lending Scheme as an example. Lenders and Government officials would say that the scheme needs more time to bed in and deliver a meaningful improvement on the volume and pricing of mortgages. However, after The Bank of England’s quarterly Trends in Lending report was issued the critics were quick to scathe the scheme’s poor impact on bank funding costs, lending rates and volumes.
That said; there are always two sides to every argument and Tesco’s has cited the FLS as a key driver in their decision to reduce its interest rates across a range of products.
The argument of whether FLS is enough in its current guise to get credit flowing rumbles on but the reality of home ownership for the next generation was really called into question following the publication of several reports this month.
Yorkshire Building Society has revealed new findings to suggest that a buyer would need to save £248 a month for eight-and-half years to secure the 20 per cent deposit. For those unable to stump up such a deposit, NewBuy would be a natural route to explore but with The Home Builder’s Federation admitting that NewBuy is likely to deliver somewhere between 20,000 and 25,000 sales over the lifetime of the scheme (versus the 100,000 sales cited upon NewBuy’s launch) it’s no wonder that that there’s confusion in the market.
An aptly titled ‘Home Truths’ report by the National Housing Federation revealed the extent of rental increases and critical housing supply issues in black and white terms. The report revealed that 390,000 new families were formed in 2011 while only 111,250 new homes were built before predicting only a modest increase in house building over the next four years to 140,000.
It’s no wonder then that a report by HSBC and the Centre for Economics & Business Research has estimated that nearly one in five first-time buyers are relying on the ‘Bank of Mum and Dad’ to secure their house purchase on property collectively valued at £5.3bn.
This time of year typically heralds the first round of market forecasts for the year ahead but with so many variables in our industry, Europe and beyond, it will be interesting to see how the market will develop between now and December when the Government’s autumn statement is due.
Sally Laker is managing director of Mortgage Intelligence Holdings