Mortgage lending hits seven-year high after general election uncertainty ends

Mortgage lending hits seven-year high after general election uncertainty

Mortgage lending jumped to a seven-year high last month as home buyers shook off uncertainty around May's general election, according to new figures.

The Council of Mortgage Lenders (CML), which represents major banks and building societies, said mortgages lifted by 29% to an estimated £20.5 billion in June, compared with the month before - marking a 15% rise on a year earlier. This was the highest June total since 2008.

Housing market experts and housebuilding firms believe many people planning to buy or sell a home put their plans on hold while they waited for the outcome of the general election.

Mortgage lending in the second quarter of the year lifted 17% to £52.2 billion compared with the previous quarter, a modest 1% increase on the same period a year ago, according to the CML.

CML economist Mohammad Jamei said: "Activity is picking up after a slow start to the year. Our lending figure for June may be flattered by the end of political uncertainties related to May's general election, and the underlying picture is likely to be one of only modest recovery.

"This should be supported by favourable conditions in the economy, though it will be limited by rising house prices and affordability pressures."

The slow start to the housing market this year led the CML to cut its 2015 forecast for lending by 5% to £209 billion.

The CML added: "Although borrower demand may have softened a little over the past year, it has by no means evaporated. Most parts of the UK continue to report positive house price growth."

It said despite yesterday's first rise in unemployment in more than two years, the fundamentals for the UK economy were strong, underpinned by rising wages and low interest rates.

The CML added that market data pointed to a recovery in housing activity over the near term.

The people who affect house prices
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Mortgage lending hits seven-year high after general election uncertainty ends

They have the power to push a price higher, depending on how many other people are in the running for a home and how liberal they want to be with the truth to the buyers. In some cases, they can also do more harm than good by initially overvaluing a property. The worst case scenario is the home eventually sells for less than it would have done had it been priced realistically in the first place.

Sometimes a quick-moving solicitor can be the difference between getting the home at the price you want and getting into a bidding war or missing out entirely. If the buyer needs a quick sale, they're more likely to do a deal with someone who has a flexible solicitor who can push through the sale so it suits them.

Research by Halifax concluded that anti-social neighbours could take £31,000 off the price of an average home. If you’re selling, you should declare any problems you’ve had on a Seller’s Property Information Form, otherwise you could face a claim later on.

While an increase in Council Tax might not be too much of a deterrent to a potential buyer, plans to grant permission for new homes, a mobile phone mast or wind turbines could knock an asking price down. If you're a buyer, the local council should have details of any future planning applications and you can search them for a small fee.

A lot of traffic in an area obviously has an effect on air quality. Since 1997 each local authority in the UK has carried out studies of the air quality in its area. If an area falls below a national benchmark for air quality, it has to be declared an Air Quality Management Area (AQMA). Some residents of the Llandaff area of Cardiff expressed concern that it had become an AQMA due to an increase in traffic in the area. Whether this becomes a widespread issue remains to be seen.

Mortgage availability is a key driver of property prices. If no-one can take out a mortgage, then prices will stall and eventually fall. We've seen this happen in parts of the UK in recent years, as lenders tightened up their criteria following the credit crunch. Conversely, good mortgage availability will mean more people are competing for properties - to a seller's advantage if their home is desirable.

An outstanding local school can add around 8% to the value of a home, according to the Royal Institution of Chartered Surveyors. On the flipside, a not so good Ofsted report can take off a similar amount. If you’re concerned about a school’s performance, one way to get involved is to become a governor.

Initiatives such as the Help To Buy scheme have been credited with pushing house prices up. A buoyant economy with strong employment gives people the confidence to buy and leads to an upward shift in house prices, while rises in unemployment have the reverse effect. Planning restrictions, at both a national and local government level, affect the number of homes in a particular area.


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