Are banks becoming more generous with their lending?

A number of reports that have been released recently have suggested that mortgage lending amongst banks in the UK has been increasing, and whilst the past couple of years has seen lending becoming increasingly restricted recent figures have indicated that mortgage lending levels have increased to their highest in around fourteen or fifteen months.

Some industry officials, however, have said that banks still have a stranglehold on the market, as they are reserving much of their cash to shore up their own finances, which means that they are placing limits on the amount that they are prepared to lend out.

This has led to a range of mixed reports with regards to the state of the mortgage market.

One official from the British Bankers Association said that lending levels were now back to those seen in the early past of 2008, suggesting an improvement in mortgage lending levels.

He said: ‘Steady monthly increases since last November have seen the number of loans approved for house purchase recover to levels seen in early 2008, although gross and net mortgage lending show a subdued wider mortgage picture. However, unlike much of the mortgage market, the high street banks are still seeing lending growth and improved mortgage availability is reflected in higher average loan approval values.’

Another industry official said that it was too soon to read too much into increased lending figures, stating: ‘It does appear at least after a traumatic 18 months that some level of balance has returned to the market. However, it would be a dangerous game to read too much into these latest figures. On the one hand, it is an encouraging sign that mortgage approvals are at their highest level for 13 months. However, remortgage levels continue to fall which suggests people are still playing the waiting game where fixed rates are concerned.’

Some experts have said, however, that banks are still being too selective and too restrictive over their mortgage lending levels. They stated that even five star borrowers were having trouble getting mortgages, and this was because lenders were restricting the amount that they were prepared to lend out each day, which meant that anyone applying after all of the allocated funds had gone would be turned down no matter what their credit was like.

One expert said: “It used to be just those with a poor credit history would find it difficult to obtain a mortgage. But now there’s no guarantee that five-star borrowers will get a deal because lenders are restricting the amount of funding available. It’s a fresh blow to Britain’s middle-classes which are already dealing with rising unemployment and repossessions.”

Another added: “It is bad news for consumers that mortgage deals are only appearing in the window for such a short period. There are now only a limited number of cheaper deals available and before the consumer has chance to look at them a second time, they are gone.”

Certainly those with damaged credit are likley to continue suffering for some time to come, as most banks are still being extra careful about who they will lend money out to, and this is causing huge problems for those that do not have perfect credit but are keen to get onto the property ladder, as the chances of getting an afforable mortgage sink even further.

Tags: fifteen months, state, banks, anyone, Financial services, mortgage market, Mortgages, mortgage lending