Mortgage News
Lending improvement threatened by eurozone crisis, says CML
The UK mortgage market remains vulnerable to the ongoing debt crisis in the eurozone, according to the CML, as it revealed gross mortgage lending was almost static month-on-month in July.
Following the 16% monthly surge in gross mortgage lending in June to £12.68bn, lending in July dropped back by 1% to £12.6bn, down 6% on the £13.3bn recorded in July 2010.
CML chief economist Bob Pannell said:”Early indications are that house purchase lending in July was buoyed by seasonal factors, but the underlying picture looks stable at best and it is possible that we may see overall house purchase activity drift lower over the coming months.”
He added: “Remortgaging continues to look positive for now, but is vulnerable to eurozone problems.
“If these persist, and materially disrupt wholesale funding markets, the recent improvements we have seen in lending appetite and LTV criteria may go into reverse.”
Richard Sexton, director of e.surv chartered surveyors, said July’s figures confirmed the growth in lending in June was “a fleeting uptick”, with lenders forced through weak economic growth and capital liquidity concerns to target low LTV borrowers.
Your First Home: confidence to build
Sponsored by Halifax Intermediaries
He said: “Less than 10% of approvals in July were for those needing high LTVs. There is a discernible gulf between interest rates on low LTV deals, which are tantalisingly cheap and the more restrictive rates on deals at 90% LTV and above.
“As a result, great swathes of lower income buyers are marooned in the rental market, while the lowest rung of the property ladder hovers just out of their reach.”
Meanwhile, Mortgage Advice Bureau’s research showed its average LTV in July dropped to 69.1% – its lowest level in 2011.
This was down from 71.3% in June and marked only the second month 2011 when the average LTV was below 70%. The average loan size was £135,873, 2.2% down on June.
In addition, the average deposit recorded by MAB broke the £60,000 barrier in July, at £60,759, significantly up June’s £55,937.
MAB said mortgage applications fell 8% in July compared to June, but were 23% up year-on-year, while mortgage applications across the year to July were 17% up on the same period of 2010.
Mortgage applications for fixed rate deals dropped 10% on June, as the prospect of a base rate rise decreased, while remortgage applications were down 18% in July, but up 34% year-on-year.
Brian Murphy, head of lending at Mortgage Advice Bureau: “Not surprisingly, mortgage transaction volumes eased in July after hitting a high point in June, as families headed off on their summer holidays.
“In a normally functioning mortgage market, application numbers drop off during July and August, so the market performed as expected.
“A stronger indicator as to the health of the mortgage market will be applications in September and October, as historically we would expect to see numbers start to pick up.”