MIp4_1209:MI 2008 24/11/2009 16:15 Page 12
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News review
News review
A look at the major issues of the
month by Nia Williams
S
o, as we end 2009 where are we in the aspect of consumer behaviour but unsecured summer of 2007 and a pick-up in consumer
grand scheme of things? As I said in borrowing is subdued and people are building confidence on the back of better economic news.
my comment, this has been one of the up deposits.” Higher demand has combined with a low level
worst years ever – closely followed by October 2009 gross mortgage lending was an of properties available for sale to result in rising
2008! But things have got better. estimated £13.5 billion, a 5 per cent rise from house prices over the past few months.
£12.9 billion in September but down 27 per cent “There are some indications that more people
2008 on £18.5 billion in October 2008, according to are deciding to put their homes on the market,
This time last year, the number of mortgages on the Council of Mortgage Lenders. encouraged by the recent improvement in
offer had shrunk by 65 per cent - and a quarter Commenting, CML economist Paul Samter market conditions. A continuation of this trend
of that was since the start of November. More observed: "There has been a significant change could help to improve the balance between
than half the available home loans required a in the type of lending taking place from the start supply and demand, curbing the strength of the
deposit of 25 per cent or more, with just 15 of the year. House purchase activity has picked stimulus to house prices resulting from the
deals available to those borrowers with a once- up significantly. In contrast, remortgaging has current imbalance."
normal 5 per cent deposit. dropped to decade-low levels as many borrowers
Most of the mortgages lost were base-rate have little incentive to refinance when they move 2010
trackers, withdrawn as rates started to come onto low reversion rates, and others find them- The January issue is going to look at various
down. In fact, in October 2008 there were 249 selves unable to do so due to equity constraints.” predictions for 2010 but this wouldn’t be right
base rate trackers available; in December 2008 without a quick look at 2010. The CML is
there were just 45. Back in November 2007 there House prices forecasting that the number of housing
were 257 products requiring no deposit; in House prices went up by 1.2 per cent in October transactions will reach 810,000 this year and
November 2008 there were 10 (allegedly!). 2009, the fourth consecutive monthly increase, 850,000 next year. Gross lending will total
Just over two years ago, at the start of according to the Halifax House Price Index. around £141 billion this year and £150 billion
November 2007, there were 3,419 different Prices in the three months to October were next year. Net lending will be modestly positive
mortgages available at deposit levels of 0 per 2.9 per cent higher compared to the previous this year at £8 billion (revised from a negative
cent up to 40 per cent. In November 2008 there three months. Nationally, the average house expectation of minus £5 billion previously), and
were just 1,213 deals on offer, and more than price rose by 2.9 per cent (£4,667) since £15 billion next year. Even better, assuming
650 were reserved for people who must raise a December 2008. Prices have increased by 7.1 interest rates remain at their current low levels,
down payment of 25 per cent or 40 per cent. per cent during the past six months since the number of mortgages 2.5 per cent of balance
There were 39,900 house purchase loans in reaching a trough in April 2009; an increase in or more in arrears will end the year at 195,000
October 2008, worth £5.5 billion, according to the average price of just over £11,000. This (down from previous forecast of 360,000), and
the Council of Mortgage Lenders (CML). This follows a decline of 23 per cent between August will rise only modestly next year to 205,000. The
was an increase of 14 per cent in volume and 10 2007 and April 2009. number of repossessions this year will total
per cent in value from September 08, but an House prices in October were 4.7 per cent around 48,000 (0.43 per cent of all mortgages)
annual decline of 52 per cent in volume and 57 lower on an annual basis. But the annual rate of and around 53,000 (0.48 per cent) next year.
per cent in value. change (measured by the average for the latest Commenting, CML director general Michael
three months against the same period a year Coogan said: "In terms of new lending next year,
2009 earlier) fell sharply from a low of -17.7 per cent we expect a modest increase. But it is difficult to
Going into 2009 things are looking up. The in April. It is at its lowest since May 2008 (-3.8 see the case for a dramatic upturn in the absence
number of new mortgages approved by banks per cent). of significant improvement in the wider
for house purchase grew slightly in October Commenting, Martin Ellis, Halifax housing economic picture. There is a risk that public
according to the latest figures from the BBA. economist, said: "House prices increased by 1.2 spending cuts and higher taxes could choke off
Data from the British Bankers’ Association per cent in October, marking the fourth recovery. So, although we have become more
(BBA) show mortgage approvals rose from consecutive monthly increase. Nationally, house optimistic, we remain cautious about market
42,073 in September to 42,238 in October. prices have risen by 2.9 per cent since the end of prospects."
BBA statistics director, David Dooks, said of 2008. They are now 7.1 per cent higher than six And he is right – we mustn’t get carried away
the latest data: "The longer it takes to emerge months ago when prices reached a trough in in our enthusiasm that 2009 is just about over.
from recession, the longer we will see April. 2010 won’t necessarily be great but this time
households and businesses continue to borrow “Demand for houses has risen in recent next year, when I look back on how 2010 has
with caution. The banks’ mortgage lending, still months due to the very low level of interest performed compared with 2009, I expect it to be
growing by more than 4% a year, shows one rates, the decline in property prices since the much more positive.
December 2009 Mortgage Introducer
www.mortgageintroducer.com
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