MORTGAGEnews


LENDING Mortgages bump along the bottom S


light falls in lending to some groups of new borrowers were tempered by comparable rises to others leading to


a flat mortgage market in September, according to new data from the Council of Mortgage Lenders (CML). There were 50,000 loans for house


purchase (worth £7.4 billion) advanced in September, unchanged by volume but down £0.2 billion in value from August. The number was down 1,000 from September 2009 but the value was up £0.3 billion. Loans for remortgage increased, accounting for 29 per cent of total lending in September. Loans to first-time buyers increased in


number by four per cent in September to 18,600 (worth £2.2 billion) but were 6 per cent lower by volume and 4 per cent lower by value than in September 2009. In contrast, the number of home-mover loans fell by two per cent to 31,600 in September following a 10 per cent fall in August. And the value also fell by 2 per cent, from £5.3 billion to £5.2 billion. Credit criteria remain tight and the slight


easing of loan-to-value ratios that occurred earlier in the year appears to have reversed. First-time buyers borrowed on average 76 per cent of the value of their property, down from 77 per cent in August, while home movers borrowed 67 per cent, unchanged from August.


STATISTICS


Mortgage possession claims slow down Forty-seven per cent of mortgage


T


he latest statistics from the Ministry of Justice on mortgage and landlord possession actions in the county


courts of England and Wales continue to decrease. The numbers have been on a downward trend since the first quarter of 2008 after generally increasing since 2003. 18,931 mortgage possession claims were


issued in the third quarter of 2010, 19 per cent lower than in the third quarter of 2009 and four per cent higher than Q2 2010. 14,138 mortgage possession claims led


to orders being made in the third quarter of 2010; 28 per cent lower than in the third quarter of 2009 and five per cent higher than in the second quarter of 2010.


42 DECEMBER 2010 PROPERTYdrum


possession claims leading to orders being made were suspended in the third quarter of 2010, compared to 44 per cent in the third quarter of 2009 and 46 per cent in the second quarter of 2010. This is now stable after decreasing from 60 per cent in 2003 to 46 per cent in 2007. Simon Rubinsohn, RICS Chief


Economist said: ‘’Data released by the Ministry of Justice makes for relatively encouraging reading. Not only is the number of properties taken into possession continuing to fall but the level of mortgage arrears is also dropping. We now expect mortgage repossessions to total no more than 37,000 for the whole of this year compared to 46,000 during 2009. Low interest rates continue to play a key role in preventing the number of repossessions


climbing towards levels seen in the early 1990s. Prompt government action, the effectiveness of mortgage protocol from lenders and a smaller rise in the jobless total have also all played a role. “In 2011, interest rates are likely to


remain at current lows for much of the year which will be helpful for homeowners. However, unemployment could begin to edge upwards as the cuts in public spending are implemented. In the light of this, the decision of the government to stick with the existing eligibility criteria for mortgage interest support is good news and should help minimise the prospect of a further material rise in the number of mortgage repossessions.” http://www.justice.gov.uk/publications/


docs/mortgage-landlord-possession- stats-q3-10.pdf


Michael Coogan, Director General of the


CML, commented, “With lending volumes at historic lows, stability in the mortgage market is the name of the game at the moment. With both consumer demand falling and funding capacity limited, neither supply nor demand look likely to feed through to any significant improvement in lending volumes as we head into winter.” David Whittaker, MD of Mortgages For


Business, said, “We’re going to continue bumping along like this until the New Year. A small rise here, a small fall there, but overall lending is going to remain flat for the rest of 2010. Despite the welcome entry to the market of the likes of Aldermore and Precise Mortgages, tight criteria will continue to freeze out many buyers. Landlords must bridge this gap. The private rental sector will become more relied upon than Florence Nightingale in the Crimea.”


“The private rental sector will become more relied upon than Florence


Nightingale in the Crimea.” DaviD whittakermortgages for business


Michael Coogan Director General CML Peter Rollings, MD of estate agent Marsh


& Parsons, said, “Lending to home buyers continues to bump along the bottom – and there is little sign that this will pick-up in the near future. Those without a large deposit still face significant difficulties in securing a mortgage – but many buyers in central London can afford to place a deposit of at least 30 per cent, which is helping to keep demand buoyant and boost activity. Over half of the purchases made in London are by cash-buyers – a combination of cash-rich UK and foreign investors, who are not constrained by issues of mortgage finance. Nevertheless, the lack of mortgage funding continues to stifle the wider national market. As banks begin to focus on repaying the money they received from government ‘bail-outs’, they must not let sensible new lending drop down their list of priorities. The revival of the housing market – and wider economy – is dependent on lenders encouraging the right borrowers onto the market.”


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