The Council of Mortgage Lenders (CML) has compiled 10 snapshots indicating that the mortgage market is improving and ‘open for business.’
Reports on activity in the mortgage market have been released by the CML on a regular basis, reporting an improvement in uptake throughout 2012.
Below is a selection of the key indicators pointing toward a recovering mortgage market, as highlighted by the CML.
- The number of property transactions is recovering, after the significant slump experienced in the wake of the crunch. And in 2013 a further improvement is expected with 950,000 transactions predicted.
- Last year the number of first-time buyers was noticeably above the levels of the previous four years.
- In January 2011, according to Moneyfacts, there were 32 mortgage products available for those wishing to borrow on a loan-to-value ratio of more than 90 per cent. At the end of December 2012, there were 71 such mortgage products.
Since the start of 2011 the number of mortgage products available at over 90 per cent LTV has doubled.
- At the depth of the market contraction, only 26 per cent of house purchase loans were at loan-to-value levels above 80 per cent. But by the fourth quarter of 2012, the proportion had risen to 34 per cent. Within this, 13 per cent of all house purchase loans in the fourth quarter were for 90 per cent or more of the property value.
- In line with the picture of improving mortgage availability at higher loan-to-value levels, an increasing proportion of first-time buyers are able to enter the market without assistance from parents or elsewhere.
- There has been a slow and steady increase in the proportion of first-time buyers buying without assistance, from 32 per cent of all first-time buyers in 2009 to 36 per cent in 2012.
- The Bank of England’s Funding for Lending scheme (FLS) is one of the influences on the wider availability of mortgages, across a wider spectrum of borrowers, at cheaper rates. Lenders themselves have expressed an expectation that there will be more mortgages available in the first quarter of this year, in sentiment measured by the Bank of England’s quarterly credit conditions survey.
- Expectations have become significantly more positive in recent quarters, and especially since the announcement of the FLS.
- The government’s Newbuy scheme has already provided thousands of households with access to 90-95 per cent mortgages on newly-built properties at rates lower than would be possible without the indemnity that developers are funding and on which the government is accepting a contingent liability.
- This year, equivalent schemes to the English NewBuy scheme will begin to take effect in both the Scottish and Welsh housing markets. And the English scheme is being extended to include cases where the borrower wishes to enter into an arrangement with a participating developer to part-exchange their existing property, and qualify for a mortgage under the NewBuy scheme on the property they are buying.
- In addition to collective initiatives such as NewBuy, it is becoming clear that lenders are upping the innovation stakes in their own businesses to help aspirational home-buyers to access the market in a responsible way.
- Three major, very visible initiatives are the Lloyds lend-a-hand mortgage, the Nationwide save-to-buy scheme, and the Barclays ‘Family Springboard’ mortgage. It is worth emphasising that current innovations are not about stretching affordability beyond sensible limits. But they are about unlocking responsible ways to lend to good borrowers with modest deposits.
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