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The mortgage industry look set to end 2013 on a high, with latest figures showing new mortgage borrowing and house purchase approvals up one-third in the year to October.

Gross mortgage lending hit £9.9 billion in October, up 2.1% from £9.7 billion in September, according to new figures from the British Bankers' Association.

The £10.6 billion worth of mortgage approvals in the month are up from an average of £9.4 billion over the previous six months, the BBA said.

Even a surprise drop in the number of mortgage approvals, down from 75,077 in September to 74,743, couldn't dampen the positive mood.

David Brown, commercial director of LSL Property Services, said: “As we approach the festive period it’s natural to expect some slowdown in activity, but as we start to look ahead to next year, more of the same would be very welcome.

 “The mortgage market has shown a burst of life, having been dredged from the bottom of a sea of despair. In only a relatively short space of time lenders have come a very long way. The next challenge will be to sustain the recovery.

“But there is still some way to go. For first-time buyers in particular, prospects are still incredibly tough. Until wages start to feel the full force of economic progress, it will only get trickier, particularly as property prices rise. 

"More loans at higher LTVs and for relatively modest amounts will be the most appetising recipe for thousands more new buyers." 

Consumer confidence continues to improve, with demand for housing strengthening, said Adrian Anderson, director of mortgage broker Anderson Harris. "Some buyers are worried about being priced out of the market further, while others are finally convinced that they will be able to get hold of mortgage finance at excellent rates, so it's as good a time as any to take the plunge.

"Several lenders have recently reduced their mortgage pricing to attract business and meet year-end targets, a trend we expect to continue into the new year.

"This should mean some great deals available to buyers and those remortgaging over the next few months."

BBA figures also showed a small drop in net mortgage lending, as more homeowners took advantage of low interest rates to pay down their equity.

"Confidence may be growing in the housing market but homeowners are reluctant to take on more borrowing while there is still uncertainty with regard to the economic and jobs' climate," Anderson said.

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