This matches November’s gross lending total, however, it is 49% higher than December 2012 (£11.4 billion) and the highest total for a December since 2007. This brings the estimated total for the year to £177 billion, up from £143 billion in 2012.
Gross lending for the fourth quarter of 2013 was therefore an estimated £52 billion. This represents a 5% increase on the third quarter of last year and a 38% increase on the fourth quarter of 2012 (£37 billion). This is the highest lending amount by quarter since quarter three of 2008.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), comments:
“Mortgage lending went from strength to strength in 2013 as improved product availability and consumer confidence sparked a renaissance in the market. With overall lending for the year at £177 billion (up from £143 billion in 2012, a 24% increase), it’s clear that switched-on consumers made the most of opportunities offered by Help to Buy and historically low mortgage rates to get their homeowning dreams back on track.
As the market picked up, so has demand for higher loan-to-value (LTV) mortgages. Bank of England data shows an increased willingness among lenders to support buyers with small deposits, as the number of products at LTV ratios greater than 90% doubled in 2013. The Help to Buy mortgage guarantee has helped normalise high LTV mortgages and prompted lenders to offer 95% mortgages regardless of their participation in the scheme. A stronger housing market and easier access to funding has transformed consumers’ chances of securing mortgage finance.
In many ways 2013 represented a sigh of relief for consumers restricted by the stale housing market of recent years. Lending conditions significantly improved, particularly benefitting first-time buyers, while affordability and responsibility have become industry buzzwords. Initial concerns over an over-heating market were put to bed by the Bank of England, who demonstrated their power to intervene through the removal of Funding for Lending, and the market is primed for even further growth in 2014.”
CML chief economist Bob Pannell observes:
“Short-term growth prospects for the housing market and the wider economy look very positive. Mortgage lending was stronger than we expected in the closing months of 2013, but lenders expect little if any boost to borrower demand this quarter.
While some of these gains reflect government schemes, the rationale for the positive narrative is a much broader one, reflecting such factors as the improving economy and jobs market, consumer confidence and competitive mortgage deals”.
Pad Bamford, Business Development Director for Genworth comments:
“Today’s figures show just how far the mortgage market has come in the last year. But there is a long way still to go to meet demand – especially from first time buyers who remain a cause célèbre, many having been unable to save for a mortgage and having retreated to the rental market.
What’s important is that access to mortgages with small deposits becomes the norm and a permanent feature of the market. The government has helped to spark this revival, but the need for 95% mortgages will far outlive Help to Buy which closes its doors in 2016. An exit strategy is yet to be confirmed, leaving questions about a future without government support.
It is encouraging that lenders outside Help to Buy are comfortably competing with – and often undercutting – those using the government scheme. As things stand buyers can actually get a better rate at 95% LTV from lenders with a private mortgage guarantee.* The more lenders can target first time buyers with attractive mortgages, the more buyers will see their house owning dreams come true – helping to avoid a scenario where anyone with a small deposit is marginalised once again.”
David Newnes, director of LSL Property Services comments:
“The property market is strengthening in tandem with a rapid rise in lending, in part thanks to growing consumer confidence now the economy has snapped back into shape. It is music to our ears that house purchase lending is up by half over the past year, with the December total reaching the loftiest height since before the crisis took hold.
Borrowing conditions have eased, which combined with a range of attractive mortgage deals, has caused flocks of buyers to dash back to the market. Lenders have been key, and clearly they are more willing to lend to high LTV borrowers, which in turn has led to a substantial rise in first-time buyer activity.
Schemes such as Help to Buy have provided solid foundations for further growth. But the grey cloud hanging above, is the lack of housing supply. Clearly a priority for the Government is house building and this is crucial to make sure the market recovery powers onwards and upwards at a sustainable rate, ensuring budding first-time buyers are not locked out.”
David Brown, commercial director of LSL Property Services, comments:
“Gross lending on a par with 2007 is no mean feat – especially given the overall quality of these loans compared to pre-crunch standards. The Mortgage market has bounced back, returning to perform the vital role it was designed for – but has been struggling to fill for years since the recession took hold. However, we’re not at the finishing line yet, and there are other struggles still to come.
While boosting demand is providing a serious incentive for house building, this might not be fast enough. It remains to be seen whether the supply of new homes satisfy the growing demand and keep a lid on price increases. As things stand, the next few years will be a serious challenge. Without finding a way to open doors for development in the right areas, the property market will become increasingly dependent on prices rather than volumes.
This squeeze would eventually filter down to all of us who need a home. Those renting from private landlords are currently benefiting from below-inflation rent rises. But this can’t last indefinitely. From the top of the purchase market, to landlords and their tenants, we need radical change and more supply to catch up with a renewed ability to buy.”
