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TODAY'S OTHER NEWS

Brokers are buzzing as mortgage market hits fresh high

Brokers are buzzing with confidence after new figures showed the mortgage market enjoyed its best July for seven years.

Gross mortgage lending hit £22bn for the month, a rise of 14% on one year earlier, according to new figures from the Council of Mortgage Lenders.

This followed a pick-up in property transactions and a rush to lock into cheap fixed rates before interest rates rise

Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), said: “There is no mistaking that the mortgage market appears to be in rude health this summer having posted the highest monthly lending total of the post-recession era.

“Lenders have clearly regained their appetite for business after repeatedly tightening loan criteria over the last 18 months."

Williams said affordability checks and pre-empty of action by the Bank of England would prevent mortgage activity from growing unchecked.

“The eventual interest rate rise will also have a dampening effect, particularly as house prices continue to rise, and the next wave of regulation is just around the corner in the form of the EU Mortgage Credit Directive.”

Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said mortgage lending had picked up pace "significantly" after a sluggish start to the year.

“Consumer demand has been stoked by record low mortgage rates. At the same time, lenders have fanned the flames with an influx of competitive products and increased appetite to lend.”"

Murphy said the outlook was positive for the rest of the year, with an improving economic backdrop. "However, affordability concerns will be at the front of people’s minds and threaten to limit the recovery.

“Even with a modest interest rate rise, there is little prospect of house prices calming down unless the number of new homes on the market starts to catch up with demand.”

Simon Checkley, managing director of Private Finance, said: “We can see that remortgaging in particular has surged as a number of people have been rushing to look for a better deal before interest rates rise.

“It is also encouraging to see that completions are up by 15% which is reflective of a busy market during the Spring.

“What we have found, however, is that liquidity is still a bit of an issue as many of those deciding to remortgage at this time have chosen to release equity for home improvements rather than move.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said markets have consistently timed the next rate incorrectly and it could be further away than many people think.

“Given that the recovery is still finely balanced, the enormous level of debt and lack of any real reason why interest rates should go up in the near future, it could still be a while before we see a rate rise.”

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