Demand for property in UK reaches three-year high

The Council of Mortgage Lenders (CML) reports that there has been an increase in mortgage lending in the third quarter of 2012. Despite a fall in the last month, September, overall there has been an increase in lending, a sign that the Funding for Lending Scheme (FLS) is starting to impact on demand for mortgages from first-time buyers.

Separately, the Royal Institution of Chartered Surveyors (RICS) said demand from homebuyers is rising at its quickest rate in nearly three years. House prices have fallen by an average of 0.9 per cent in the last 12 months, according to the Nationwide..

Surveyors said that there has been a “considerable rebound” in interest from potential buyers in October. 18 per cent more surveyors report rises in new buyer enquiries than falls, according to the latest RICS housing market study.

RICS says that it believes potential buyers are testing the water in the pre-Christmas market. It reports a balance of 18 per cent more forms reporting a rise in new b uyer enquiries than a fall. Its latest survey points to an increase in sales next year as it shows a balance of 25 per cent more surveyors predicting that transactions will rise and fall in the next three months.

The FLS aims to free up lending from banks by allowing them to borrow from wholesale markets at a cheaper rate as long as they pass on the borrowing to individuals and businesses. By the end of October a total of 30 banks had signed up for the scheme which, it is estimated, could help to unblock up to £66 billion in lending.

Demand for mortgage finance is rising at its fastest level for three years, according to the latest CML report.

There were 53,900 loans in August, but this fell to 44,400 loans in September, down from 48,800 loans in September 2011.

Detailed in these figures was a 14 per cent monthly drop in loans to first-time buyers in September compared to August. In September there were 17,900 loans to first-time buyers worth £2.3 billion, compared to 20,700 loans advanced in August.

Overall, mortgage lending has been gradually increasing since the start of the year but the fall in lending in September is a reminder that from month to month, figures remain volatile.

Paul Smee, CML director general, said:”While lending in September was slow after a particularly strong August, quarterly figures suggest that the underlying picture is more positive.

“An increase in house purchase approvals indicated by the Bank of England in September suggests that we may see a return to growth in coming months, but it may take some time before a boost from the Funding for Lending scheme is reflected in house purchase completions.”

There was a rise in lending for remortgaging in September, up from 23,200 in loans in August to 24,600, worth £3.3 billion in September. This was still 25 per cent lower than in September 2011.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “A renewed dip in mortgage advances in September reported by the CML highlights the fact that downside risks persist to the house price outlook and they could well drift lower over the winter months.

“However, some support for house prices should come from recent decent employment growth and likely extended low interest rates, while mortgages look like become increasingly available helped by the “Funding for Lending” scheme launched at the start of August by the Bank of England.”

 

Source : MyFinances.co.uk

Tuesday, 13 November 2012 08:37
By Ben Salisbury