Demand for mortgages improved in December for the first time since July, suggesting the home lending market may have stabilised. The Council of Mortgage Lenders yesterday reported a modest rise in the number of loans for house purchases in December after four consecutive months of falls. But analysts and lenders cautioned that the rise could have been due to a bounce-back after artificially weak figures for November.
On October 31, the Financial Services Authority took over responsibility for regulating mortgages, introducing rules that led to some mortgages being taken off the market and others taking longer to process. The number of loans for house purchase in December was 84,000, just 1,000 up on November. It was the first monthly rise since July but the figure was still 27 per cent lower than in December 2003. Gross mortgage lending also increased for the first time since July, to Pounds 9.8bn from November's Pounds 9.1bn.
The British Bankers' Association, which accounts for about two- thirds of mortgage lending, reported a sharper increase in lending in December but acknowledged that some of this may have been due to "processing catch-up". Ed Stansfield of Capital Economics, the consultancy, said the switch to regulation by the FSA might have contributed to November's nine-year low in mortgage approvals. Michael Coogan, the CML director-general, expected the housing market to remain weak until the spring.
The total value of home loans last year at Pounds 130.8bn was 5 per cent higher than in 2003 but "the figures were indisputably weakening by the end of the year. Going into 2005, we expect the slowdown to continue into the spring", he said. The number of loans for house purchase last year fell to its lowest level in four years, to 1.19m. Of this total, 31 per cent was taken up by first-time buyers, well below the long-term average of 50 per cent.
Halifax, the mortgage lender, will today publish research showing the recent property boom has made nine out of 10 towns in the UK unaffordable for new buyers. It estimated there were 361,000 first- time buyers last year, the lowest annual total since 1981. The least affordable towns were in the south-east, including Gerrards Cross, where the average property price is 18 times the average income of a new buyer. The most affordable towns were in Scotland. The typical first-time buyer is aged 34, compared with 32 in 1999.
On October 31, the Financial Services Authority took over responsibility for regulating mortgages, introducing rules that led to some mortgages being taken off the market and others taking longer to process. The number of loans for house purchase in December was 84,000, just 1,000 up on November. It was the first monthly rise since July but the figure was still 27 per cent lower than in December 2003. Gross mortgage lending also increased for the first time since July, to Pounds 9.8bn from November's Pounds 9.1bn.
The British Bankers' Association, which accounts for about two- thirds of mortgage lending, reported a sharper increase in lending in December but acknowledged that some of this may have been due to "processing catch-up". Ed Stansfield of Capital Economics, the consultancy, said the switch to regulation by the FSA might have contributed to November's nine-year low in mortgage approvals. Michael Coogan, the CML director-general, expected the housing market to remain weak until the spring.
The total value of home loans last year at Pounds 130.8bn was 5 per cent higher than in 2003 but "the figures were indisputably weakening by the end of the year. Going into 2005, we expect the slowdown to continue into the spring", he said. The number of loans for house purchase last year fell to its lowest level in four years, to 1.19m. Of this total, 31 per cent was taken up by first-time buyers, well below the long-term average of 50 per cent.
Halifax, the mortgage lender, will today publish research showing the recent property boom has made nine out of 10 towns in the UK unaffordable for new buyers. It estimated there were 361,000 first- time buyers last year, the lowest annual total since 1981. The least affordable towns were in the south-east, including Gerrards Cross, where the average property price is 18 times the average income of a new buyer. The most affordable towns were in Scotland. The typical first-time buyer is aged 34, compared with 32 in 1999.
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