Lending Lows
For the third month in succession, mortgage lending rose, according to figures for March released by the Council of Mortgage Lenders. £11.5bn was lent during the month, a rise of nearly 25% from the previous month.
The figures reflect the latest in a wide range of economic data which is being heralded by some as proof that the market is recovering, but, as with much of the other data, it’s not totally unqualified good news.
The figure of £11.5bn is only up 3% on the figure for March last year, when the mortgage market had plummeted to its lowest depths in the wake of the credit crunch. In the broader sense, total mortgage lending in the first three months of the year was significantly lower than in the last three months of 2009.
This was largely due to changes in the stamp duty regulations which encouraged a lot of people to rush through deals at the back end of last year. There is also an argument which says people have successfully paid off large chunks of their mortgage due to lower rates and therefore when they move house they have to borrow less.
The recovery, such as it is, is widely expected to continue (albeit gently) over the course of the next few months. The markets almost always improve as the weather improves and this year the contrast is particularly marked from the freezing conditions of the winter to the relatively balmy spring sunshine.
In the slightly longer term, however, experts warn that things could look black for homeowners. From 2011 the banks are expected to start repaying the government for the money that was borrowed at the height of the banking crisis. This money totals a massive £300bn and will almost certainly mean that mortgage lending, and lending of other sorts like personal loans will be very tightly controlled, and only offered to those who have the very best credit ratings.
For the moment that leaves homeowners facing a difficult decision, there are more sellers than buyers in the market which will make it difficult to sell and with interest rates so low at the moment (banks like Santander are breaking records for the low interest rates on their mortgages – have a look at their website to give their mortgage calculator a go) there is a strong incentive to sit tight and pay off as much mortgage as possible. However, with mortgage lending due to tighten in the not-too-distant future, now might be a good time to move after all.
