Buy to Let
Opinion divided over 2013 lending levels
Mortgage industry opinion remains divided on the level of gross mortgage lending expected this year.
With gross mortgage lending in 2012 expected to come in at about £144bn, much of the industry is predicting another rise in 2013.
The latest People’s Poll carried out by Your Mortgage magazine’s sister publication Mortgage Solutions asked the industry whether it expected lending in 2013 to top the £150bn mark. Opinion was divided, if a little more optimistic, with 31% of voters anticipating that lending this year would beat that target while 36% said they expected it to fall short.
A further 33% of voters said they felt gross lending would end the year at £150bn.
Data released by The Council of Mortgage Lenders has outlined its projection for the coming year. The CML said that it expected lending to reach £156bn over the next 12 months, with residential transactions jumping to 950,000, bolstered by the government’s Funding for Lending Scheme (FLS).
CML chief economist Bob Pannell said: “Whereas the FLS was conceived by the UK authorities to mitigate the worst impacts of a potential fresh credit crunch, its launch has in fact coincided with a more positive external funding environment, in part due to European Central Bank actions.
“Given this more benign context, in our view the FLS now has the potential to underpin a modest pick-up in mortgage lending activity. A key test, however, will be the extent to which greater borrower appetite materialises in response to better credit availability.”
But Patrick Bamford, business development director at Genworth, said that the industry was wrong to expect the government scheme to transform the market single-handedly.
“Much of the expectation of an improved market relies on the Funding for Lending Scheme, but lenders have to date been reluctant to transform the drawn-down capital into keener rates and higher LTVs for first-time buyers.
“Until such time as this occurs or lenders start utilising all the options available to them such as mortgage insurance, potential homeowners will be left out in the cold.”
Richard Sexton, director of e.surv chartered surveyors, added: “If the Eurozone continues to stabilise and the UK economy makes more progress, the improvement could continue throughout 2013.
“It’s a big ‘if’ though. Banks are still wary about focusing lending on first-time buyers and borrowers with small deposits, which is the biggest barrier to the recovery of the housing market.
“But they are optimistic about 2013, even though their hands are tied by strict requirements on the amount of capital they have to hold in reserve, which is leaching away funds that could be used to help first-time buyers.
“The government needs to do more to help banks lend more to lower income borrowers, otherwise the market will flatline.”
Mark Dyason, director of independent mortgage brokerage Edinburgh Mortgage Advice, added: “We’ll get growth in 2013, the question is how much? That will depend on criteria and volumes at higher loan-to-values.
“In 2012 as a whole, the UK’s building societies have put its banks to shame. Clearly they don’t have the scale of the banks but they have the desire and willingness to lend.”