Mortgage lenders see strong month


Embargoed to 0001 Thursday March 6File photo dates 09/08/13 of Estate Agent's boards as the Government has failed to demonstrate whether its ?3.7 billion Help To Buy equity loan mortgage scheme is giving value for money, the spending watchdog has warned. PRESS ASSOCIATION Photo. Issue date: Thursday March 6, 2014. The scheme was launched in England last April with the aim of offering credit-worthy buyers with a deposit of at least 5% a helping hand onto the property ladder as well as increasing the housing supply by being targeted at new-build properties only. But the National Audit Office (NAO) found there is no method in place to measure what the

Mortgage lenders have reported their strongest February since 2008 as housing market confidence continues to recover.

An estimated £15.2 billion worth of home loans were handed out last month, which marks a 43% increase on February 2013, according to the Council of Mortgage Lenders' (CML) figures.

Despite being a strong figure for this time of year, the latest monthly lending total is the lowest seen since last June and also represents a 6% dip compared with January this year, when £16.1 billion worth of mortgages were advanced.

The housing market traditionally slows down around the winter months, but Bob Pannell, chief economist for the CML, said that once seasonal factors are taken into account, the underlying signs are that the market continues to be "strong".

He said: "First-time buyers have benefited most from the Government's Help to Buy initiatives, with the more recent mortgage guarantee scheme now starting to push typical loan-to-value levels higher.

"The housing market got a further boost from this week's Budget. This, together with benign developments in the economy more widely, should bolster short-term sentiment and activity."

The UK Government offers two schemes under Help to Buy to give people with deposits as low as 5% a helping hand on or up the housing ladder.

The first initiative, which was launched last spring in England, offers equity loans to help people buy a new-build home, while the second, which was launched last autumn across the UK, offers mortgages backed by the state to people who want to buy a new-build or an older home.

Chancellor George Osborne confirmed in his Budget yesterday that the equity loan element of the Help to Buy scheme will be extended until the end of the decade, which ministers hope will support the construction of 120,00 new homes, and to build the "first new garden city in almost a hundred
years" at Ebbsfleet.

But the Royal Institution of Chartered Surveyors (Rics) has said that "much more needs to be done" and criticised Mr Osborne for not offering more help to home buyers struggling to find some up-front cash through changes to stamp duty.

Fears have also been raised that mortgage support schemes like Help to Buy are encouraging home buyers to overstretch themselves at a time when borrowing is cheap.

Toughened mortgage rules are coming into force across the industry next month, which will mean lenders not only have to consider whether a potential borrower can afford their payments now but whether they will still be able to afford them when interest rates eventually start to rise as the economy improves.

The Office for Budget Responsibility (OBR) has forecast the average year-on-year rise in house prices to be 8.5% this year, 7.8% in 2015, 5% in 2016 and 3.7% in 2018 and 2019.

The Chancellor said yesterday that he has asked the Bank of England's stability watchdog, the Financial Policy Committee, to keep a close eye on the housing market.

The people who affect house prices

The people who affect house prices