Property lending in the UK is increasing but it is still at historically low levels and a major hindrance to a recovery in the real estate market, experts claim.
The latest figures from the Council of Mortgage Lenders, which represents 98% of residential lenders, show that gross mortgage lending in June was 17% higher in June. But this is still nearly half what it was a year ago.
Some £12.3 billion was lent in June compared with £10.5 billion in May. The report also shows that total gross lending in the second quarter of 2009 was £33.3 billion, unchanged from the previous quarter. Both quarters in 2009 have shown the lowest amount of mortgage lending since the first quarter of 2001.
And the CML points out that lack of lending is one of the factors holding back a recovery in the property market. ‘The pick-up in June’s lending largely reflects seasonal factors and these may well support lending volumes at moderately higher levels over the rest of the summer. But the combined effects of the restricted nature of mortgage funding, reduced number of active lenders, weak labour market and limited consumer demand are likely to hold back any significant and underlying improvement,’ said CML economist, Paul Samter.
The mortgage drought has left increasing numbers of frustrated buyers and home movers high and dry, with a quarter unable to find a mortgage, according to a report from finance website Moneysupermarket.
It says that the number of mortgage products has fallen to a record low. At the height of the market in August 2007 first-time buyers could choose from 20,000 deals, but now there are just 1,195. Home owners could pick from 30,000 mortgages, but now have a choice of just 2,283.
‘Unfortunately, it is doubtful that the number of products will increase significantly any time soon,’ said Louise Cuming, head of mortgages at the website.
And a poll for the National Association of Estate Agents shows that more than one in 25 purchasers cannot find a mortgage that they qualify for, anywhere in the market. Peter Bolton King, chief executive of the NAEA, said mortgage lenders had shut up shop. He called on the Government to apply pressure to get them lending again.
Dominic Agace, Managing Director of Winkworth chain of estate agents said it is clear that the picture is improving but the usual summer upsurge in activity has been overridden by the ongoing decline in the property market and restriction in finance availability. ‘We are still in a marketplace constrained by finance availability,’ he said.