Signs of increased mortgage availability

Gross mortgage lending declined to an estimated £10.2 billion in April, down 12 per cent from £11.6 billion in March and 1 per cent from £10.3 billion in April 2009, according to new data from the Council of Mortgage Lenders (CML). This is the lowest April total since 2000 (£9.3 billion).

A slight seasonal decline was expected as Easter fell in April this year. Gross lending remains broadly in line with the CML’s forecast for lending of £150 billion for 2010 as a whole.

The CML notes that there have been signs of increased mortgage availability in recent months with higher loan-to-value mortgages becoming available and rates falling slightly. But it remains a difficult market, particularly for first-time buyers without large deposits, and lenders continue to face funding challenges. The CML says that the imminent fiscal squeeze will drag on the speed of the recovery, which in turn will slow the pick up in the housing market, although the Bank of England’s welcome of the plans to address the public finances is likely to mean that interest rates can remain low for longer, which will help to support the market.

CML director general Michael Coogan commented:

“We welcome signs in the coalition agreement that some housing priorities are on the government’s radar. But we still do not know how the incoming government plans to address the funding gap looming over the next few years in the mortgage market. It is important that the new government grasps this nettle. Unless funding issues are addressed, any recovery in lending may well be curtailed as the repayment date on the support schemes gets closer.”