News Review: Lending


The lending arena heads in the right direction


by David Finlay, intermediary channel director, Barclays


gross mortgage lending totalled an estimated £12.6bn in June which signified the highest monthly total since July last year (£13.3bn). this represented a 16% increase from the £10.8bn lent in may but was 3% lower than June 2010 (£13.0bn). this is according to data from the council of mortgage Lenders. gross lending for the


second quarter of 2011 was therefore an estimated £33.5bn, an 11% increase from the first three months of this year (£30.1bn) and a 3% decrease from the second quarter of 2010 (£34.4bn). Lending in the first half of this year totalled £63.7bn. this is only slightly below the first six months of 2010 (£64.1bn). these results suggest,


quite rightly, that the lending arena continues on its steady march in the right direction. However, general economic malaise means that lofty expectations should be not be placed on lending levels over the coming months. Having said that, the encouraging thing for the intermediary sector is that competition continues to emerge amongst lenders which is helping to stimulate certain areas of the lending arena.


Remortgage the current remortgage market is a vibrant one with a plethora of competitive deals, LtVs creeping up and criteria


loosening slightly. this means that remortgaging continues to provide the best opportunity for hundreds of thousands of homeowners to escape their current SVr or for those coming to the end of their current fixed rate deals. it has also been suggested


by the royal institution of chartered Surveyors that an increasing number of homeowners are choosing to improve their existing properties rather than moving house. the survey shows 48% of chartered surveyor estate agents say the slow sales market is prompting people to improve their properties rather than move.


Housing market House prices increased by 1.2% in June, but remain 3.5% lower than the same time last year, according to the latest Halifax House Price index. the average house price in June was £163,049, representing a quarterly change of -0.5%. this is said to be its smallest quarterly fall since Q2 2010. Looking further ahead,


Pricewaterhousecooper’s latest uK economic outlook reports that uK real house prices are unlikely to return to their previous peak levels until 2020. analysis in the report says there is only a 12% chance that real house prices will rise above their 2007 peak by 2015, and the median projection is for prices to fall by 12% between 2007 and 2015. even by 2020, there is only a 53% chance of a real house price rise relative to 2007. the house price continues


rollercoaster 8 mortgage introducer AUGUST 2011


but thankfully without the significant falls and climbs experienced in the more turbulent times. it appears that a combination of low interest rates, decent unemployment levels and some market positivity have been at the forefront of the recent improvements and let’s hope these factors continue to have a progressive effect on the housing market in the 2nd half of 2011.


“The current remortgage market is a vibrant one with a plethora of competitive deals”


Economy the uK’s economic growth slowed down in the three months to June and is too weak to support a hike in the base rate, a leading think tank has warned. the national institute of economic and Social research says it estimates gdP grew by 0.1% in the three months ending in June, following growth of 0.5% in the three months ending in may. the economy as a whole


continues to face some difficult decisions and challenges. Fuel prices remain an issue and the result of crises’ such as those in greece will certainly cause some kind of ripple effect on confidence and performance


on the rest of european markets and maybe beyond.


Products the number of mortgage products available to intermediaries


increased


by 4% in June, its seventh monthly rise in a row. according to mortgage Brain’s latest product analysis there were 12,525 mortgage products listed on the firm’s system in June, up from 11,996 at the end of may and the highest number since april 2008. all main product types saw an increase, with variable rate deals witnessing the biggest rise in product numbers. the number of variable deals rose by 21% to reach 1,500. meanwhile the number of


trackers available increased by 6% to 3,237 and fixed rate deals were up by 1% to reach 7,788. research conducted by


moneyfacts group has also revealed that the number of residential mortgage products has hit a near three year high. June’s moneyfacts mortgage trends treasury report found that at the end of June, there were 2,665 residential mortgages, up from 2,534 - the highest number seen since 31 october 2008. competition is key in


ensuring that the mortgage market continues to head in the right direction. it’s great to see that more and more lenders are placing their faith in the intermediary market and long may this continue as this distribution channel remains the most important factor in ensuring that borrowers get the right advice on right deal at the right time.


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