However, we should not be downcast as there are a number of reasons for optimism in the property market. Not least because the GDP contraction is actually so close to zero that we should more realistically regard this as a flat economy, rather than one flirting with a ‘triple dip’.
Whilst the economic backdrop for the housing and mortgage markets remains challenging, we are seeing better funding market conditions since last summer. UK banks have benefitted even more following the introduction of the Funding for Lending scheme (FLS) last August.
First-time buyers ultimately underpin the housing market and our focus is targeted at increasing lending to first-time buyers. There were around 216,000 first-time buyers (FTBs) in 2012, up from 193,000 in 2011. Whilst this was the highest annual total since 2007, it was still nearly 50% lower than in 2006 (402,800).
In a bid to support the first-time buyer mortgage market Lloyds Banking Group has committed to lending £6.5bn to first-time buyers in 2013, enabling 60,000 people to get onto the property ladder.
We know that there are still challenges for those looking to buy their first home, especially for those who’ve stretched themselves to save for their deposit. The recovery in the housing market rests on growth in the wider economy.
Whilst the property market is likely to continue to be challenging, we remain committed to getting things right at the start of the chain, creating liquidity in the housing market and helping more people get on to the property ladder in 2013.
Mike Jones is director of intermediaries at Lloyds Banking Group
