Despite a range of doom-mongering forecasts predicting the end of the property market as we know it, a quick look at the mortgage lending statistics will show that the market is actually quite buoyant. The figures also demonstrate that first-time buyers are coming back into the market, having been somewhat sidelined by high prices; these first-timers are seeing price rises slow – or even reverse – and are now taking the leap into home ownership.
According to the Council of Mortgage Lenders (CML) the proportion of home loans approved in October for first-time buyers was nudging one-third of all mortgages; at 32 per cent, this figure is a substantial improvement over the previous month’s 29 per cent. Indeed, this improvement in the participation of property novices marks a high point in recent months, as the current number of first-time buyers as a percentage of home buyers is the highest since April 2003.
With the monetary policy committee of the Bank of England having kept interest rates in a holding pattern these last few months, it looks as though the first-time buyer will continue to come back to its previous place as a major force in the marketplace.
Mortgage lending fell in October for the third consecutive month to the lowest level since February, according to the Council of Mortgage Lenders (CML). Gross lending totalled £23.3 billion, eight per cent lower than the previous month’s figure of £25.4 billion; and the most recent figure is 17 per cent lower than that of October last year, when lending totalled £28 billion.
Although the number of loans for house purchase declined by nine per cent compared to the previous month, the slowdown was more pronounced for movers than for first-time buyers. House purchases accounted for 44 per cent of gross lending, a figure that is unchanged from the previous month.
Michael Coogan, CML director general, said: ‘These figures are in line with other indicators suggesting that interest rate rises have had their desired effect and the housing market is slowing down. Although lending figures may fluctuate going forward, we expect the slowdown to continue through the winter months.
‘However, interest rates are now probably at or near their peak, so despite the slowing market the overwhelming majority of existing borrowers will be able to continue to afford their mortgage payments.’
Looking ahead
Home hunters will start 2005 on a brighter note according to recent research. After hitting a low point in November, confidence in the housing market recovered slightly in December. Of people surveyed, 65.8 per cent expect house prices to fall in 2005, compared to 72 per cent in November, and 30 per cent now expect house prices to rise, compared to 24 per cent in November, showing a real belief in the market’s fortunes.