Mortgage market to ease in 2013?.....
Thousands of people should find it easier to obtain a mortgage and buy a new home in 2013.
Many lenders have ‘disappeared’ in the last few years and the traditional mortgage market has been incredibly difficult for most people. But a significant boost came in August last year. The Bank of England launched an initiative ‘The funding for lending scheme’ aimed in part at encouraging more lending to home buyers. The scheme involves offering up to £60bn in cheap money to banks and building societies, in the expectation that they lend it to people and businesses and avert any further slowdown in the wider economy.
"For people who have only got a 10% deposit, there are definitely better options now than there were even six months ago and I suspect the options will be better again by the end of this year," says Ray Boulger of mortgage broker John Charcol. "We have seen more lenders come into the 85% and 90% loan-to-value space, with more competitive deals, and I think that trend will continue as FLS continues to give lenders more cheap funds over the course of this year," he adds.
In fact, the number of completed house sales rose by 6% last year to about 930,000, despite banks and building societies continuing to ration their mortgage lending to only the most credit-worthy of borrowers.
Meanwhile the number of new mortgages approved, but not yet lent, picked up in the last few months of the year, suggesting more sales ahead.
So Funding for lending seems to be having some modest effect and, on the face of it, the prospects for more people to buy their first home, or move to another one, are now better than for several years. But property commentator Henry Pryor warns against too much optimism. He points out that millions of people are still prevented from moving, either because past house price falls have eroded the equity in their homes, effectively locking them in to their current properties, or they cannot put down the huge deposit typically asked of a first-time buyer. "You can't throw £5bn to £10bn at the mortgage market and not see some sort of result," he says. "But it is still going to be incredibly difficult for the vast majority to access the deals that we are going to see lenders offering, because most people still won't have the pre-requisite 25% plus deposit."