Mortgage loans see Funding for Lending boost
MORTGAGE lending climbed to an 11-month high in October, according to data out yesterday, as the Funding for Lending Scheme (FLS) entered its third full month of activity.
Gross mortgage loans hit £12.9bn in October, data from the Council of Mortgage Lenders (CML) showed, up 13.3 per cent on September, and up 4.2 per cent on October last year.
“House purchase and remortgage activity both appear to have picked up recently, and this should be supported by an improvement in the availability and pricing of mortgages,” said CML chief economist Bob Pannell, who put this improvement down to the government’s scheme. “FLS is likely to have made an early positive impact,” he claimed, “helping to counter some of the negative pressures associated with a protracted and weak economic recovery.”
This means gross lending is running at an average of £11.9bn per month so far this year, up from £11.7bn over the whole of last year, and £11.3bn during 2010.
But the Bank of England has consistently forecast that FLS would only have its full impact on the mortgage market by the beginning of 2013.
Mark Harris, boss of SPF Private Clients, a mortgage broker, said he expected the mortgage market to ease further and further over the coming year. “This bodes well for next year – as lenders saturate the low loan-to-value (LTV) market with a plethora of rock-bottom rates, they will be forced to turn to the higher LTV bracket,” he predicted.
But Howard Archer at IHS Global Insight disagreed, warning that the pick-up could be illusory. “Any signs of a pick-up in housing market activity need to be treated with considerable caution,” he said. “As firstly there have been previous false dawns recently, and secondly housing market activity remains very low compared to long-term norms.”