Loans for house purchase increased in April, but were down year on year.
There were 40,900 house purchase loans, up 8% from 37,900 in March, but 2% lower than in April 2010.
Remortgages fell sharply month on month. There were 24,700 remortgage loans in April, down 28% on March but up 1% on April 2010.
The latest report from the Council of Mortgage Lenders also says that, with Bank of England data showing a fall in house purchase approvals in April, there could be a ‘lull’ in house purchase completions in the next few months.
The number of loans to first-time buyers increased by 8% in April from 14,700 (worth £1.7bn) in March to 15,800 (worth £1.9bn). However, the number of loans to first-time buyers rose by just 1% year on year.
First-time buyers borrowed on average 80% of their property’s purchase price in April, more than for most of the last two and a half years, but still well below the 90% that first-time buyers typically borrowed.
Michael Coogan, CML director general, said: “The market continues on a stable footing and the increase in house purchase lending is a good sign that the stability will continue throughout 2011.
“However, the economic outlook, coupled with Bank of England subdued approvals data for April, suggests a muted summer for mortgage completions, so we do not expect further increases in lending over the coming months.”
David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains estate agency chains, said: “Any growth in monthly mortgage lending is welcome news for the UK’s army of frustrated homebuyers, but a comparison with 2010 shows we’re far from out of the woods.
“You still have to jump through a lot of hoops to get a mortgage, and deposits for first-time buyers need to be more than 50% larger than they were three years ago. The market is still showing no signs of a sustained recovery.
“While the slight improvement in the affordability of first-time mortgages gives some encouragement, there is a long way to go before buying property becomes a realistic ambition for large numbers of first-time buyers who are struggling to pull together the very large deposits still required in most cases.”
David Whittaker, managing director of Mortgages For Business, said: “Activity will remain subdued this year with month-on-month rises and falls being the norm, and until there is a significant sea-change in the amount lenders are prepared to issue to borrowers, we’re unlikely to see a dramatic recovery in the mortgage market.
“Lenders and the Government must come up with a sensible balance of capital requirements and lending targets. If they don’t, the market will be stuck in the doldrums for a long time to come.”
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Comments
@FTB Dan. Some words of wisdom from an old man. Happiness comes from living in the present, not worrying about a set of circumstances that could appear in the next 15 years, by the time you finish paying your mortgage, when the average house price will be approx. £1m, you will be wondering why you wasted years of your young life with your lady friend cooped up in a bedsit for a measly £50k saving.
FTB Jack and ...
you didn't answer who told you what 10 +4 came out at?
I agree that home ownership is desirable, which is why I want one. But not any price, which has been the British mantra for many years. ‘No matter what you pay, just buy’. As a result we have a nation almost drowning in unsustainable debt. I see little point in buying a family home if one of us cannot afford to give up work to raise children.
Just look at the emotive terms you use ‘squatter’, ‘scrooge’ ‘having fun’. You make it sound as if delayed gratification and saving for your future is a sin, that happiness can only come through financial naivety and being shackled to a debt. My prudence will mean my woman and I can retire younger and wealthier than the financially incontinent can ever hope to. Even if that does mean not getting exactly what we want the moment we want it whilst young.
It amazes me that so many people bash the banks, yet are so quick to become their indentured servants.
MT - It's not so black and white. My colleague is currently having to get major work done on the roof of the property he 'owns' (well, has a large mortgage on) and has been hit by some very large bills.
FTB Dan- blog what you like but your jealously shines through mate, but well done for helping your “semi” mate own a valuable property that at some time in the future he can sell and your rent will have made him a packet.
By the way my misses does not think a semi anything worthwhile, aspire to more I would suggest, you will get on better in life. Don’t brag about a fairly average salary for anyone with a bit of gumption, I doubt you get it anyway looking at the crap you have posted!.
Come on boy do better, do you not have any aspirations.
By the way who told you the answer to 10 +4?
Still at least you would have a place you could call home and put your roots down, do a bit of decorating, cultivate a garden and enjoy all the other benefits of home ownership, rather than playing scrooge and squatting in a mates house with your lady friend waiting for a house price crash that may never happen. I could understand it if you didn't have the money but you are on a joint salary of £75k! You could be having so much more fun!
@Monkey Tennis, I am afraid you have a very faulty set of assumptions on your hands. I am renting a couple of room in a house with a semi-mate (we used to work together). It is a large detached house and he is hardly ever there. Me and woman pay £600pm with zero bills, which I know if cheap, but he knows he can trust me to take care of the place. This is allowing me to save a grand a month towards a house and no slow down in the slightest with nights out and holidays etc.
If I followed your advice and bought at any price I would be paying about £18k interest/rent to the bank in year 1, and £35k by year 2.
The important point to get your head around is that when you ‘buy’ a house with a mortgage you have not really bought it at all. The bank has on your behalf while you rent it from them and make payments towards owning it one day. So by doing what I am doing I am actually much closer to owning a house than someone who cannot delay their gratification and rushed while property is overvalued.
@ftb dan. I'm assuming you are currently renting a property to the tune of 1000pcm or thereabouts. So you are burning 12k per annum. So you need house prices to fall
More then 3pc per annum
To profit for this gamble. Over the past 12 months property prices in Kent i doubt haven't fallen at all, I will check on land reg. Let's
Assume
This has
Been your strategy for a
Year in which instance you now require a house price
Fall of 6pc to
Break even. Keep chucking the pound coins in the fruit machine fella!
FTB Dan: thanks for the info. Give me some specific areas/postcodes to further research in order to fully get my head round where you are coming from. You are obviously looking - and you are in the patch. I am 200-odd miles away, so I need more to go on.
Most FTB's:
A repeat........
So you expect those who purchased at the 'top' of the market to sell at 20-30% less than they paid - mortgaged or not?........Dream on. Only distressed sales - the rest will stick it out. Rent - it's cheaper, then buy if you want to when the time is right. Just stop griping.
@Peebee, I am after a 3 bed-semi in Kent (commute to London) the ones that are advertised at the moment at around £350, willing to jump in as soon as I can get one for a number beginning with 2.
I really don’t think that is unreasonable, its only 2003 ish prices. But it is below the really insane period of 2004-2008.
Re Dan's first point - for the sake of balance, property prices in Australia are currently insane. Unlike in the UK, that is at least built on an economic boom (raw material exports).
China's housing market is also looking so frothy the government is intervening (what a radical idea!).
Having said all that, the Chinese boom is based on Westerners buying what they produce. That is obviously slowing down though. As that demand reduces, then Chinese companies will need less raw material from places like Australia...
SO, FTB Dan - what do you want?
Do you want to spend £400k+ on a property (you don't mention you have a deposit but I assume you can put down minimum 10%...) - if so, how much is the property you WOULD buy currently marketing at?
OR, do you want a property which is currently marketing at £400k, at less - and how much less?
OR, do you want a two hundred grand house - making most of the above redundant, although the same questions apply, I guess so answer them please using YOUR budgetary definitions...
I REALLY look forward to your response!
FTB Dan is right Peebee. I am in a similar situation and offered a similar amount.
I too wouldn't buy while houses are so very overvalued. The mortgages are out there but prices are just too high for sensible buyers and the slight restrictions such as a deposit are restriction enough to prevent irresponsible buyers many of which turned to shared ownership scams.
@peebee, An offer in principal is actually a lender declaring that they would lend you money having already assessed your ability to pay and having run a credit check. As such it is not worthless, it is a clear statement of intent.
The powerful point you make is the misdirected one. Indeed, before an offer is advanced a valuation must be carried out. Yet since I am stating I am unable to choose a property because they are overpriced kinda reinforces the argument I am making.
FTB Dan - to be OFFERED a mortgage you need to have CHOSEN a property and had a valuation carried out. You have apparently had neither.
You simply have an offer in principle - which is worth approximately the paper it is written on...
This article does the debate a service by acknowledging that government (well, the FSA) is demanding high capital requirements which means banks have to lend to government ahead of anyone else. However, it fails to acknowledge that even if that is the case, banks are currently making significantly higher numbers of loans offers, yet these offers are being declined by the credit worthy whom they are being offered to.
The reason is that the sensible and credit worth types do not want to get deep into debt, not for property that remains hugely overpriced. Every other country in the world has faced a house price crash, barring our own, we have simply seen volumes disappear, this is no market at all.
In my own cases my wife and I earn £75k between us and we have been offered £400k as a mortgage, with that I can easily afford a suitable family home in a pleasant area, but I will not, as I believe those properties still overpriced. I have no objection to reasonable and manageable debt, but I will not turn myself into a debt slave for a generation just to help one more vendor escape reality. Price is the only issue that matters in this and any other market and ours are too high.