Mortgage Lending Jumps 21% In A Month
Evidence has emerged suggesting that the housing market is blowing up at a faster pace than expected, amidst scares of a new ‘bubble’, blown by Government funding plans.
The Council of Mortgage Lenders (CML) said that lending rocketed by 21% in May, as compared to April, estimated worth of mortgages being £14.7bn. The CML said it was the peak of the estimated gross lending per month, since October 2008.
They had predicted a pickup in activities this year, supported by efforts on part of the administration to make the housing market easier to access, with its Funding for Lending scheme. But, the CML was impressed by strong acceleration in the month of May, quoting that it exceeded even their expectations.
It seems to suggest that this abrupt uplift could be partly due to the bad weather, earlier this year, creating a “pent up” demand.
Its chief economist Bob Pannell said: “Funding conditions, helped by the Funding for Lending scheme, continue to look favourable and are supporting more competitive mortgage pricing and availability and a gradual resumption of lenders’ risk appetite.
“While the direction of travel is clear and fits well with the more positive housing surveys from RICS (Royal Institution of Chartered Surveyors) and others, our forward estimate does imply somewhat stronger house purchase activity than we had been expecting.
“This may reflect a degree of pent up sales following the extended spell of poor weather earlier this year”.
Lenders are raising the mortgage rates, and availability of mortgages has seen a general rise and mortgage availability has generally increased since the Funding for Lending scheme, thus giving lenders the desired access to affordable finance, so they can help borrowers.
Various other schemes like NewBuy and Help to Buy are specifically designed and launched to suit those with smaller finances.
Earlier this week, property web portal Rightmove said that the sellers’ average bids had shot across the milestone of ‘quarter of a million pounds’, for the first time.
These figures added to already existing concerns that these Government schemes pose the risk of blowing a housing “bubble”, what with borrowers stretching their finances too far, as did happen before the crisis.
The Chancellor George Osborne had earlier stated that these programmes have a limited life of activity, and are a response to would-be house owners, who find it cumbersome to be able to get on the housing ladder.