It’s an encouraging sound
DESPITE a fair amount of negative press about the housing market, there is a similar noise to that of a ‘boom’ emanating from the recent mor tgage figures.These numbers show no sign of slowing down – homeowners borrowed £220.3bn last year, up 8% on 2014 and the highest level since the star t of the financial crisis in 2008.
Lending in December, typically a quiet month for house buyers, hit £19.9bn, up 23% on the same month a year earlier and nearly as high as the £20.5bn repor ted in November.
The statistics, from the Council of Mor tgage Lenders (CML), suggest the proper ty market is still hot, despite growing concern that over-inflated values are pricing out first-time buyers.
Mark Carney, the governor of the Bank of England, provided good news that interest rates will stay low for at least another year, which means mor tgages will remain cheap and continue to suppor t the market.
Jeremy Duncombe, of Legal & General’s Mor tgage Club, said the proper ty market was largely being driven by a shor tage of houses for sale stating: “2015 has been an exceedingly strong year for mor tgage lending, and we expect favourable UK economic conditions to fur ther drive demand in 2016. That said, the number of transactions has remained relatively flat throughout the year as a result of the lack of available housing stock for buyers.This is contrar y to the increases we are seeing in lending, showing that this strong performance is being driven in par t by escalating house prices as people are having to take out larger loans to secure a proper ty.”
But with a rate rise now postponed, many economists believe pressure on the mor tgage market may reduce.
Howard Archer, chief economist at IHS Global Insight said:“Mr Carney’s speech will likely reduce the perceived need of a significant number of home owners to re-mor tgage now to lock in low rates before they rise. It may also dilute the perceived need of some home buyers to move in the near term to make sure they can take advantage of ver y low mor tgage rates. On the other hand, more people may be inclined to buy a house in the knowledge that interest rates are likely to stay lower for longer then only creep up.”