Mortgage lending jumps in March, lenders report
Mortgage lending jumped to £11.5bn in March, a 24% rise from February the Council of Mortgage Lenders (CML) said.
The figure was also 3% up on March last year, when the market had reached its nadir in the wake of the credit crunch.
Despite this rise, the CML said activity in the property market was still relatively subdued.
It pointed out that total mortgage lending in the first three months of the year was still substantially lower than in the last three months of 2009.
"Despite the increase in activity late last year and a subsequent fall early this year - due to the end of the stamp duty holiday - the underlying position looks to have barely changed," said CML economist Paul Samter.
"But with the gradually improving economic backdrop and interest rates still low, we continue to expect a gentle improvement in market conditions later in the year," he added.
The property market appears to be picking up after its immediate post-Christmas slump.
This revival would normally happen anyway during the spring.
The rebound has been exaggerated, though, by the near-freeze the market suffered during January and February.
This was caused by the very cold weather and the aftermath of the rush to beat the reintroduction of the old stamp duty threshold of £125,000.
Last week both the National Association of Estate Agents (NAEA) and the Royal Institution of Chartered Surveyors (Rics) reported that March had seen a big rise in the number of people putting their homes up for sale.
The most recent official figures have also shown that the number of completed sales in the UK went up in February to 58,000, a rise of 15% from January.
However this was still far lower than in the same month just two years ago, when sales stood at 85,000.
The CML repeated its warning that a huge problem is looming over the property market.
From 2011, lenders will have to find about £300bn to repay the government for the money it lent them via its emergency support schemes - the special liquidity scheme and credit guarantee scheme - at the height of the banking crisis.
As such, mortgage lending will continue to be rationed, the CML said.
The government recently announced a further measure to prop up activity in the market by abolishing, for two years, the 1% stamp duty band, for first-time buyers only.
This means they can buy a home worth up to £250,000 without paying the usual 1% property tax.
However first-time buyers continue to be asked to put down very large deposits, typically running at an average 25% of the value of the homes they are buying.
"The keenest rates are for those seeking a mortgage of less than 75% loan-to-value (LTV)," said David Black at banking industry analysts Defaqto.
"Mortgages permitting 90% LTV are significantly more expensive.
"First time buyers are particularly hard hit as they need a substantial deposit merely to get on the housing ladder and a significantly larger deposit to access the best rates," he added.
source: www.bbc.co.uk/news 20th April 2010