It is interesting that figures from the Council of Mortgage Lenders show gross mortgage lending fell by 13% in January and the economy is sluggish.
It is difficult to see how it could be anything other than that, judging by what is going on with the spending cuts and employment figures.
But I think there are a few things that lenders could do to get the market moving – and they seem pretty basic.
Lenders could raise some of the LTVs on offer and stop forcing everyone on to capital repayment.
Figures recently published in Mortgage Strategy show that just 6% of first-time buyers took out an interest-only mortgage in December and this seems like a crazy statistic to me.
When interest rates rise, many buyers on capital repayment are going to wish that they had the option of taking interest-only in order to make the mortgage more affordable.
Next month’s lending figures should be interesting. There has been a lot more activity with the talk of base rate rising, but I wonder how all the rate withdrawals and hikes will affect the figures.
There have been some pretty big rate increases from the likes of ING Direct and Chelsea and Yorkshire building societies, and it could be a while before Woolwich starts offering five-year fixes again. It is instead offering four-year deals, which is still a decent option.
It is also a shame that Abbey’s four-year fixed rate has gone up by 0.5%, from 3.99% to 4.49%.