It looks as if there has been a welcome lift in the housing market over the last few months. Mortgage lending is up, and it seems that more people are able to sell and move home. The government’s NewBuy scheme also continues to attract first-time buyers for newly-built homes.
Latest figures from the Council of Mortgage Lenders (CML) show that mortgage lending has continued to recover during the summer. This follows a sharp fall in April when stamp duty concession for first-time buyers finished.
According to the CML figures, buyers moving home took out 30, 500 loans in July. Overall lending to movers was up 8% more than in June and 4% more than in July last year. This should give some encouragement to anyone trying to sell a property at the moment.
NewBuy Scheme continues to attract first-time buyers
The CML also reports that lending to first-time buyers in July declined slightly from June, but remains 8% higher than this time last year. The government has done much to encourage the sale of new homes with its NewBuy scheme. There are now 1, 300 reservations under an initiative, which – with the support of the government, house-builders and lenders – enables borrowers to take out 95% mortgages on newly-built properties.
Criticisms have been raised that NewBuy does little to encourage ‘second-steppers’ wanting to move up the property ladder, as it only applies to new homes. The government has not listened to calls to reform the way Stamp Duty is calculated (except for creating a new top-level band with duty at 7%!)
With the average price of a home being around £165, 000 (according to Nationwide’s figures for August) second-time buyers face having to pay a substantial amount of duty as well as the other costs of moving.
Mortgages are now more affordable
House prices have generally fallen since their peak levels of a few years ago, and while there are signs of a slight rise recently they continue fairly stable. Mortgages are now more affordable due to continuing low interest rates coupled with a rise in incomes. This should lead to greater activity in the housing market, but this is likely to be a gradual process.
As Robert Gardner, Nationwide's Chief Economist, says in his latest report:
“The evolution of housing market conditions in future is likely to be closely tied to the trajectory of the wider economy. . . Policy measures aimed at supporting the availability of credit and lowering the cost of borrowing … should help to provide support. However, much will depend on developments in the labour market. Increased job security, lower unemployment and stronger earnings growth will be needed to generate a sustained upturn in activity. ”
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