2013 is forecast to be a more “stable and positive year” for both the housing and mortgage markets according to the Council of Mortgage Lenders (CML). In its latest market update it said that lending to first time buyers and homemovers increased in October and it expects the recent improvements to continue into next year.
The CMLs figures show a total of 49,500 house purchase loans being advanced in October, up from 43,500 loans in September and 44,900 loans in October last year.
Remortgaging was also up in October, reaching its highest level in 6 months, thanks in part to the government’s Funding for Lending Scheme, which resulted in a number of lenders cutting mortgage rates.
In its latest House Price report, Halifax said that, "there are signs that the Funding for Lending Scheme (FLS) is helping to reduce mortgage rates and may be contributing to the recent pick-up in mortgage approvals. The FLS should help to ease credit constraints, resulting in some improvement in mortgage availability in 2013."
At L&C we’re seeing a similarly positive end to 2012 with mortgage applications from first time buyers, home mover and remortgagers, all up on September. Applications from first time buyers rose again in November which is a promising sign for the housing market overall in 2013.
Although mortgage numbers are up, the average loan-to-value (LTV) ratio for people buying their first home still remains at 80%, as it has done for the last two years. This means that the typical buyer needs to find a 20% deposit of around £27,000 – based on Halifax’s average FTB house price of £135,468. And while mortgage rates have been coming down recently, the cuts have tended to focus on deals that require a big deposit and choice is still rather limited for buyers with a deposit of 10% or less.
This means that getting a mortgage and getting on the housing ladder is still a challenge for prospective buyers who aren’t able to get a big deposit together. We hope that 2013 will see some more activity at this end of the market, with lenders offering better choice and more competitive rates to first time buyers.