April’s mortgage approval figures showed that approvals are slowly starting to creep back up. Both the British Bankers’ Association and the Council of Mortgage Lenders recently reported that numbers were up in March and April.
Although these numbers are still significantly lower than the peak of the market, they do suggest that we may have passed the worst.
But without new money flowing into the market, there are insufficient retail and institutional deposits to fuel any meaningful increase in mortgage lending. Despite taxpayers having pumped untold billions into the banking system, ordinary people are still being starved of mortgage finance.
Both sets of data, while encouraging, are still 50% down on what is considered to be a healthy market. So there is still some way to go before we are out of intensive care and on a sustained recovery.
We need action on how mortgages are funded via wholesale markets. Recently we have seen big banks successfully tap into securitisations to release capital, but this is insufficient to bring about a recovery.
Also, the banks that borrowed money via the Special Liquidity Scheme are wrestling with how they are going to repay the sums, a large chunk of which comes due in the next couple of years.
Let’s hope that, whichever party gets into power, they will have the motivation to get the mortgage market back to good health as quickly as possible.