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Mortgage lending jumps in March | Mortgage lending jumps in March |
(about 1 hour later) | |
Mortgage lending jumped to £11.5bn in March, a 24% rise from February the Council of Mortgage Lenders (CML) said. | Mortgage lending jumped to £11.5bn in March, a 24% rise from February the Council of Mortgage Lenders (CML) said. |
The figure was also 3% up on March last year, when the market had reached its nadir in the wake of the credit crunch. | The figure was also 3% up on March last year, when the market had reached its nadir in the wake of the credit crunch. |
Despite this rise, the CML said activity in the property market was still relatively subdued. | Despite this rise, the CML said activity in the property market was still relatively subdued. |
It pointed out that total mortgage lending in the first three months of the year was still substantially lower than in the last three months of 2009. | It pointed out that total mortgage lending in the first three months of the year was still substantially lower than in the last three months of 2009. |
"Despite the increase in activity late last year and a subsequent fall early this year - due to the end of the stamp duty holiday - the underlying position looks to have barely changed," said CML economist Paul Samter. | "Despite the increase in activity late last year and a subsequent fall early this year - due to the end of the stamp duty holiday - the underlying position looks to have barely changed," said CML economist Paul Samter. |
"But with the gradually improving economic backdrop and interest rates still low, we continue to expect a gentle improvement in market conditions later in the year," he added. | "But with the gradually improving economic backdrop and interest rates still low, we continue to expect a gentle improvement in market conditions later in the year," he added. |
Spring revival | |
The property market appears to be picking up after its immediate post-Christmas slump. | |
This revival would normally happen anyway during the spring. | |
The rebound has been exaggerated, though, by the near-freeze the market suffered during January and February. | |
This was caused by the very cold weather and the aftermath of the rush to beat the reintroduction of the old stamp duty threshold of £125,000. | |
Last week both the National Association of Estate Agents (NAEA) and the Royal Institution of Chartered Surveyors (Rics) reported that March had seen a big rise in the number of people putting their homes up for sale. | |
The most recent official figures have also shown that the number of completed sales in the UK went up in February to 58,000, a rise of 15% from January. | |
However this was still far lower than in the same month just two years ago, when sales stood at 85,000. | |
Problem | |
The CML repeated its warning that a huge problem is looming over the property market. | |
Mortgages permitting 90% LTV are significantly more expensive David Black, Defaqto | |
From 2011, lenders will have to find about £300bn to repay the government for the money it lent them via its emergency support schemes - the special liquidity scheme and credit guarantee scheme - at the height of the banking crisis. | |
As such, mortgage lending will continue to be rationed, the CML said. | |
The government recently announced a further measure to prop up activity in the market by abolishing, for two years, the 1% stamp duty band, for first-time buyers only. | |
This means they can buy a home worth up to £250,000 without paying the usual 1% property tax. | |
However first-time buyers continue to be asked to put down very large deposits, typically running at an average 25% of the value of the homes they are buying. | |
"The keenest rates are for those seeking a mortgage of less than 75% loan-to-value (LTV)," said David Black at banking industry analysts Defaqto. | |
"Mortgages permitting 90% LTV are significantly more expensive. | |
"First time buyers are particularly hard hit as they need a substantial deposit merely to get on the housing ladder and a significantly larger deposit to access the best rates," he added. |
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