Mortgage market 'in good form'
Friday, 18 November 2005 12:00
Overall mortgage lending, and by extension the property market, is "in good form", the latest figures show.
Data released today by the Council of Mortgage Lenders (CML), the Building Societies Association (BSA), and the British Bankers' Association (BBA) today showed that mortgage lending is holding strong - even in the traditional winder doldrums.
The CML figures show lending down slightly on last month, but up 16 per cent on last October, building societies saw October provide the largest lending of 2005, while data from the major British banking groups show a "steady" market.
"While we would normally expect lending activity to slow down at this time of year, the modest decline in October lending suggests the market is in good form," the CML said in a statement.
Director-general Michael Coogan added: "The resilience of lending activity in recent months contrasts sharply with the ongoing uncertainty about household finances and consumer confidence. We believe that gross mortgage advances for 2005 will reach around £280 billion - similar to the levels seen in 2003 and 2004.
"The decision by the Bank of England's Monetary Policy Committee to hold interest rates steady in November was widely expected, and fits with market expectations that they will remain broadly flat in 2006. In this environment, we believe the housing market will stabilise around current levels."
Adrian Coles, director-general of the BSA, said: "Both seasonally adjusted gross advances and commitment to lend reached their highest figure of the year in October. The market seems to be showing a slow but steady recovery."
But the picture was not entirely rosy.
"It is clear that we are nowhere near boom conditions and there is no possibility of such conditions emerging over the next year or two," Mr Coles added.
Howard Archer, chief UK economist at the Global Insight consultancy, agreed that a boom is not on the cards.
"We do not expect the recent modest overall firming in housing market activity to lead to sustained sharp rises in house prices any time soon," he said today.
"Not only is mortgage activity still well below recent past peak levels, but most affordability ratios are still stretched and will become more so if house prices start moving back up markedly.
"Meanwhile, the large number of available properties means that buyers still have significant choice, which helps their bargaining position. Furthermore, most survey evidence suggests that more realistic pricing by sellers has been a significant factor in rising buyer interest."
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