Mortgage lending – the truth behind the statistics

Mortgage lending – the truth behind the statistics

12:00 PM, 12th July 2011, About 13 years ago 1

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The number of home loans increased in May, according to the latest figures from the Council of Mortgage Lenders (CML).

Despite the headline attached to the figures by the CML press office, actual lending year-on-year is down as is the amount home owners borrowed.

The number of mortgages for home purchase – including movers and first time buyers – for May was 40,900 loans valued at £5.9 billion. Lending was marginally up on April – by 1,000 loans and the amount borrowed stayed the same.

The CML’s headline is true but only shines a light on a small part of a much larger picture.

Although mortgage lending to buy homes has increased month-on-month in 2011, the figures are still lagging those of 2010, which were considerably down on peak lending themselves.

The trend in lending for 2011 is an average 36,280 home purchase loans a month worth £5.2 billion.

The problem this presents to the housing market is online housing portal Rightmove reckons around 1 million homes will be placed on the market this year while banks and building societies are likely to fund around 435,000 mortgages worth about £62.4 billion.

That’s fewer loans and less lending than any of the last three years and way below the top of the market in 2006 and 2007. The lowest figures in the period were 511,700 purchase mortgages worth £69.3 billion in 2009.

Commenting on the latest figures, Michael Coogan, CML director general said: “Over the coming months seasonal factors are likely to push up lending for house purchase. There is no evidence of any drastic changes on the horizon or any significant shifts in direction for the mortgage market. These stable conditions are expected to continue for the rest of the year.

“Funding market conditions appear a little more positive, for example, recent securitisation deals suggest confidence has returned as investors regain their appetite to invest in bonds backed by mortgage assets. Overall this is a positive influence on mortgage market conditions.”

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16:07 PM, 18th July 2011, About 13 years ago

Banks are still operating an unrealistic credit score system. If you have a portfolio in reality you will find it more difficult to raise finance if it is geared above 75%ltv.

What is great is that most of them have had help from the the public purse, which makes it even more frustrating. In the future the banks, if found to be reckless with their capital etc should go to the wall , like the hundreds of viable small businesses which have faced a lack of funding.

I hop[e these low interest rates are costing them dearly.

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