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May 31, 2013

Positive Year in Property Ahead

A more stable and "positive" year in the UK housing and mortgage markets can be expected in 2013, a lenders' group has said.

The Council of Mortgage Lenders (CML) said a steady increase in lending for house purchases signalled more activity.

However, first-time buyers still required a deposit on average of 20% to get on the property ladder.

This group accounted for four in 10 of all house purchase loans in October.

Deposit issues

In total, there were 49,500 home loans advanced for house purchases in October, the CML figures show.

This was an increase of 13.8% compared with September, which was a slow month in the UK housing market. It was a 10.2% rise compared with October 2011.

"If the incremental improvements in house purchase lending that we are currently seeing persist as we expect them to, then next year should feel a more stable and positive year in the housing and mortgage markets," said CML director general Paul Smee.

There was a 19% annual rise in loans for house purchases to first-time buyers in October, the figures show. However, the need for a 20% deposit was a source of concern for some commentators.

"The huge number of aspiring homeowners will never be able to find this kind of deposit," said Neil Ryner, director of the property finance group, Ryner and Partners.

"What we are currently seeing are the transactions of the privileged few."

The CML recently suggested that only 34% of all first-time buyers bought their first home without the financial help of their parents or other relatives at present. That proportion dropped to 28% in London.

However, Aaron Strutt, of mortgage broker Trinity Financial, said: "Building societies have been looking to increase their lending figures this year and they regularly offer cheaper mortgages than the biggest banks.

"Over the last few weeks, they have improved their first-time buyer rates in particular and this has helped to increase competition between the lenders."

http://www.bbc.co.uk/news/business-20692588