Confidence to return to mortgage market

Permalink: Confidence to return to mortgage market
by Kay Murchie

According to experts, confidence should return to the mortgage market and loans should be easier to obtain following the Government’s rescue plan announced today.

It was unveiled today that the Government is to pump £37 billion into three of the country’s largest banks.

The Government is to inject £20 billion into Royal Bank of Scotland (RBS) while a further £17 billion will be pumped into Lloyds TSB and HBOS.

According to Ray Boulger at mortgage broker, John Charcol, the move will mean HBOS will have to increase lending and they will have to be competitive.

The credit crunch has meant mortgage lending has been restricted and in particular, first-time buyers have been finding it harder to obtain home loans unless they have at least a 25% deposit.

As a result, new mortgage lending has plummeted recently and the latest figures from the Bank of England show that 32,000 new mortgages were approved in August - 70% less compared with the same period last year.

Meanwhile, a survey of 486 brokers by the Intermediary Mortgage Lenders Association (IMLA) has established that confidence is to return to the market after brokers’ forecasts of future business volumes are slightly more positive than in May or July this year.

When questioned about their forecasts for future levels of mortgage business, intermediaries are predicting a decline of between 0.4% for remortgages and 2.3% for first-time buyers over the next two months.

The results are far more positive than they were in May of this year, when first-time buyer activity was expected to plunge by nearly 5%, home mover business was expected to fall by 3.6% and buy-to-let activity by 3.4%.

Commenting on the results of the survey, Peter Williams, IMLA’s executive director, said confidence among brokers is starting to return, albeit very slowly.