x
By using this website, you agree to our use of cookies to enhance your experience.

Two new sets of figures published yesterday showed the mortgage and housing markets pulling out of their early year slump in March, despite the pre-election uncertainty.

UK house prices increased by 9.6% in the year to March, up from the 7.4% annual growth seen one month earlier, according to the Office for National Statistics (ONS).

Excluding London, house prices grew 8.1%. And they grew fastest of all in Scotland at 14.6%, the highest annual increase since July 2007.

New figures from the Council of Mortgage Lenders (CML) showed UK house purchase lending jumped 16% month-on month in March.

But life is getting tougher for first-time buyers with the number of loans down 24% on the final quarter of last year, and down 11% year-on-year.

By contrast, buy-to-let lending leapt 21% over the last 12 months.

Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), said CML data indicates the early momentum for 2015 clearly rests with the remortgage market. "The number of loans rose in the first quarter while both first-time buyer and house purchase lending slowed.

"The fact that people are staying put for longer and mortgage pricing is at record lows gives people added incentives to reassess their existing loans, and should help to bring the remortgage market further out of its slumber."

But Williams said "regulatory creep" over the last 12 months has subdued the market and questioned whether it could regain its previous momentum.

"MMR is designed to bite harder the more active the market becomes. On that basis lending will not run out of control, but we are still waiting for significant supply-side measures to balance the picture and help keep prices down."

Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), pointed out that house prices are now rising four times faster than wages, bringing genuine concerns about affordability.

"Certain regions of the UK have seen particularly high growth, with the accelerating rise of house prices in the South-East and East suggesting that the London market is having a ripple effect in other parts of the country.

"This trend looks likely to continue as people look further out into the commuter belt for good value."

Murphy said the government should waste no time in helping first-time buyers. "But the reality is it will take much more than Help to Buy ISAs and a limited number of starter homes to address the challenges faced by aspiring buyers on modest incomes."

Stephen Smith, director, Legal & General Mortgage Club and Housing, said activity is picking up now that the General Election is out of the way and the second half of the year should be much busier.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said lenders are keen to lend and with business levels subdued at the start of the year in the pre-election hiatus, there is lost ground to make up.

"We expect to see an ebb and flow on pricing as lenders jockey for market share. Swap rates have been rising over the past few weeks but they are just part of the information lenders take into account when setting rates."

Harris said that with the UK falling into deflation with prices rising 0.1% in the year to April, the likelihood of an interest rate rise has been pushed even further back.

"Buy-to-let lending remains strong, proving its enduring popularity. Investors like the tangible nature of property compared with stocks and shares, and the rising demand for rental property from those unable to buy means there is a ready supply of tenants.

"The relaxation of pension rules last month is likely to provide a further boost for the sector.

"A combination of cheap mortgage rates, easing criteria and poor savings rates are convincing many that investment property is a sensible home for their money."

Comments

MovePal MovePal MovePal