Mortgage lending starts to pick up

Over the past year mortgage lending in the UK has remained very subdued, having gone through a very turbulent and difficult period after the global financial crisis and recession wreaked havoc across the nation’s financial markets. Many people have struggled to get a mortgage over the past year or two, which has resulted in fewer people being able to buy property and far more people having to rent a home.

However, there is some good news on the horizon as recent reports have revealed that mortgage lending levels have increased for a third month in a row, sparking hopes that property sales could start to increase as a result of this. Approvals are now said to be 3 percent higher than they were in July of last year, which is promising news. However, many first time buyers will still struggle to find a deposit for a mortgage, which will continue to cause a problem on the mortgage and property markets.

Despite this news, figures relating to property sales have shown that so far this year property sales have been stagnating. Figures were released by HM Revenue and Customs, showing that in July there were 79,000 property sales. This was the highest number of sales so far this year according to the figures but it was still a lower figure than a year ago.

One economist said that compared to long term trends and norms housing activity was still very low at present despite increases in mortgage approvals.

He said: “With consumer confidence weak and the economic outlook currently looking pretty grim, we see little reason to change our view that modest falls in house prices are more likely than not over the coming months.”

Tags: property, economist, home, horizon, outlook, recession, term trends, July

Mortgage approvals rise to one year high in June

A leading industry group has released data showing that the number of mortgage approvals for new property purchases in the month of June reached a one year high. The data was released last week by the British Bankers’ Association and showed that the number of UK mortgage approvals for June reached 31,747.

This figure for June was an increase from the 30,803 mortgage approvals that were seen in the previous month. It was also the highest value seen since July of 2010. Statistics Director from the BBA, David Dooks, said that banks were continuing to lend on mortgages for new property purchases but added that the mortgage market was still weak. He did state that there had been some level of revival in the buy to let market, with investors seeing the benefits of buy to let in the current climate where demand for private rental homes is at an all time high.

The results also showed that there had been a drop in net lending to non-financial companies, which fell by 2.5 percent. Officials said that this drop in net lending was partly due to low demand for credit from these companies, many of which are very wary about taking on further business debt in the difficult financial climate, with many preferring to try and pay down debt rather than take more debt on. However, this could have a significant negative impact on the growth of the economy according to many industry officials.

IHS Global Insight chief economist Howard Archer said: “It is likely a sign that companies are becoming increasingly wary about borrowing and investing in the current difficult economic environment – which in itself is worrying for growth prospects.”

Tags: growth, June, british bankers association, new property purchases, value

Mortgage default levels could rise

According to a recent report the number of homeowners that are defaulting on their mortgage repayments in the UK is set to rise over the coming three months. The data comes from a survey that was carried out by the Bank of England amongst lenders and formed part of the central bank’s quarterly survey on credit conditions.

Over the past three months default levels amongst UK homeowners is said to have remained relatively flat. However, the figures showed that the balance of lenders who were expecting the rate of defaults on mortgage loans to increase rose to its highest level since the end of 2009.

The survey also showed that banks were not expecting to see any sharp increases in lending over the coming months, with the outlook for bad debts being cited as one of the reasons why banks may remain reluctant to lend in the immediate future. One economist said that the Bank of England report had nothing in it that suggested banks were likely to start lending more soon.

According to the data there has also been little in the way of change over the last three months when it comes to the availability of personal loans, mortgages and business loans. The data indicated that there could be an increase in unsecured lending to households over the next three months but that mortgage lending was likely to remain flat.

The report did indicate that there had been a marked improvement in the buy to let sector in the UK, with demand for buy to let having increased over the past few months. Lenders are expecting this improvements to continue over the coming few months and for the remainder of this year according to the report.

Tags: United Kingdom, Federal Housing Administration, business loans, bank, uk homeowners, quarterly survey, improvements, economist

Another drop in house prices for October

October has seen another fall in house prices in the UK according to recently released figures. The figures have been released by Nationwide, and the High Street lender has said that the dearth of buyers in the UK has resulted in continued falls with house prices.

The average property price in the UK is said to have fallen by £2400 in October, with the Nationwide’s house price index falling by 0.7 percent over the course of the month due to buyers steering clear of the market. Over the course of the month the average property price has now fallen to £164,381.

Over recent months the pressure on house prices in the UK has been mounting, as buyers have shied away from the market for a variety of reasons. There are many would be buyers that simply cannot get a mortgage due to current restrictions in the market, and many others that could get a mortgage but cannot afford the high deposit levels that lenders are asking for.

Another factor that is likely to have a serious impact on buyer interest and property prices is the spending Review recently outlined by the coalition government. The sweeping spending cuts that have been proposed will have raised concerns amongst households and individuals who are now in fear of losing their jobs due to the cuts in the public sector, which could also have a knock on effect on the private sector.

An economist from Nationwide said: ‘If the recent trend in house prices were to continue through November and December, the annual rate of house price inflation would drop to between 0% and minus 1% by the end of 2010. This would compare to a rate of 5.9% at the end of 2009.’

Tags: economist, buyer, average property price, Business Finance, Nationwide Building Society, finance, lenders

Number of empty homes reached five year peak last year

Recently released figures have shown that the number of homes that were left empty reached their highest level in five years in 2008. The number of homes that had been left empty for at least six months in England is said to have increased by 9 percent in the year to April 2008, with the number of private homes that had been left empty for at least this length of time rising to 303,285. This was the highest figure since April of 2003. Read more

Tags: loan, average earnings, big gap, economist, empty properties, homes, higher levels

No increase in base rate again

For the ninth month in a row the Bank of England has decided to keep the base interest rate on hold, leaving it static at its lowest level in history, which is just 0.5 percent. The decision to keep the base rate so low has come as no surprise to most industry experts given the ongoing problems facing the economy and further threats of job losses. The announcement was made following the December Monetary Policy Committee meeting, which was held last week.

The Bank of England also announced that it would continue with its quantitative easing program to try and revive the economy, having announced last month that the plan was being extended to a total of £200 billion, reflecting an extension of a further £25 billion. Originally the maximum amount earmarked for quantitative easing had been £150 billion. No clue was given as to whether the scheme would be extended further next year.

Many industry experts have slated the quantitative easing programme, stating that it is clear that the plan is not having the desired effect on the economy but the government is continuing to use the programme to try and ease the economic problems. It is thought that when the current programme runs out in January the government will announce whether it plans to extend the scheme further.

In the meantime, an economist from Global Insight, Howard Archer, said that it was likely that the Bank of England would keep the base rate on hold at 0.5 percent until late next year, and even predicted that it could be 2011 before the base rate was increased. He said that fears over unsustainable recovery meant that it was far too soon for the government to think of policy tightening.

Tags: Howard Archer, Monetary policy, economist, interest rates, The Bank of England, Global Insight Inc, inflation

QE failing to make necessary impact

Following the recent announcement that a larger amount of money is to be ploughed into the economy through the quantitative easing programme a number of industry groups and officials have come forward to claim that the government is simply throwing good money after bad because the scheme is clearly not working. Read more

Tags: quantitative easing, Federal Reserve System, estimates, quantitative easing programme, economist, economics, gdp, Monetary Policy Committee

Worst of recession could be over according to economist

One economist, who has recently become a member of the powerful Monetary Policy Committee, stated that the worst of the recession for Britain could be over. Read more

Tags: recession over, certain time lag, interests rates, rate, economist

BoE to cut interest rates next week?

The increasing downside risk due to the credit crunch is one of the reasons behind a possible interest rate cut by the Bank of England (BoE) next week, financial analysts have predicted.

Experts from six financial institutions including the Centre for Economic and Business Research, Global Insight, Nationwide and Barclays Capital, all anticipate that BoE’s monetary policy committee (Mpc) to cut rates by 0.25 per cent in April.

Lloyds TSB and HSBC said that there would be no change in rates this month.

Howard Archer, UK chief economist at Global Insight, said: “We believe that the increasing downside risks to UK growth stemming from tight credit conditions will prompt the Bank of England to trim interest rates by a further 25 basis points to 5.00 per cent at its April meeting.”

The decision by the Mpc on interest rates will be announced at 12 noon on April 10th after its monthly two-day meeting.

Currently interest rates stand at 5.25 per cent.

Tags: month, economist, Global Insight, April, business research, UK chief economist, week, Lloyds Banking Group

BoE keeps bank rate on hold

The Bank of England (BoE) has chosen to leave the base rate of interest at its present level of 5.25 per cent.

According to Abbey, the BoE monetary policy committee’s (MPC’s) decision will not have come as much of a surprise to the markets.

Barry Naisbitt, chief economist at the firm, said that last month’s inflation report from the BoE indicated that lower interest rates were “consistent” with meeting its target of two per cent inflation.

This month, the majority of the MPC’s members decided that slowing economic activity “needed to be balanced against their expectation that activity would slow and that inflation indicators remain high”, he claimed.

However, Mr Naisbitt suggested that this view is likely to change over the coming months and a rate cut could be on the way.

Responding to the move, Colbalt Capital said that leaving rates unchanged was “a shame” but noted that the MPC was in a “no-win situation”.

A cut would have been a “welcome boost” for homeowners, it stated.

Tags: committee, economist, expectation, present level, Colbalt, economics, Colbalt Capital, rate cut

UK consumer confidence at all time low

Consumer confidence in the UK is at an all time low, according to figures from the Nationwide Index.

The findings show that the number of people confident about employment dropped almost ten per cent to 36 per cent in January, a drop from 44 per cent in December.

Expectations surrounding house price growth continued to fall with consumers thinking house prices would decrease by 0.2 per cent over the next six months.

Martin Gahbauer, Nationwide’s senior economist, said: “The continued downward trend in consumer confidence in January is not unexpected in light of current uncertainties about the economic outlook.”

He said that sharp falls in share prices, the rising costs of essential items and a weak exchange rate have all combined to negatively impact consumer sentiment which could be blamed for the pessimistic economic outlook.

Despite a downturn in the Expectations index, 44 of respondents believed that now is a good time to spend on household goods, compared with 35 per cent in December.

Meanwhile, Nationwide has warned credit card holders to be careful to avoid incurring charge while using their cards abroad.

Tags: downturn, share prices, cent, Index numbers, consumer confidence, confidence, economist

Bank has a ‘difficult’ decision to make in slow economy

With inflation rates expected to “creep up over the course of next year” the Bank of England has to make a “difficult decision about interest rates”, according to industry experts.

The Confederation of British Industry (CBI) has said that the combination of inflationary pressure at a time when the economy is slowing will force the Bank to make a decision on what action to take.

Lai Wha Co, principal economist for the CBI, said: “On the one hand it’s monitoring how sharply the economy might slow, but on the other hand it has to weigh up the concerns about inflationary risk.”

She added that if inflation was to rise more markedly than the market forecast then the Bank’s members may be constrained.

The cuts in interest rates that some consumers were hoping for may not be delivered Ms Co concluded.

The CBI has predicted that inflation will rise during 2008 due to the higher price of oil, gas and food.

Tags: interest rate, economist, decision, time, hand, forecast

Rate of inflation to be held?

It appears probable that the Bank of England’s monetary policy committee (MPC) will decide to leave interest rates on hold following its meeting on January 12th.

However, the rates are likely to be raised to 5.25 per cent next month, meaning more bad news for mortgage holders.

The raise has been predicted by economists for some time and it comes after the cost of borrowing was increased twice towards the end of 2006.

Inflation is currently at 2.7 per cent, the highest it has ever been under this Labour government, and policymakers are concerned about inflationary wage deals as a result of living costs.

“A rate hike this week is not out of the question but given we still know nothing about January wage settlements, I think the bank is more likely to wait,” Alan Castle, economist at Lehman Brothers, told Reuters.

A recent poll carried out by Reuters found that 49 out of 50 economists asked expected rates to remain on hold, while almost 50 per cent thought there would be a rise by March.

Tags: hold, money, alan castle, bank, economist, quantitative easing, policymakers