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Lenders expect house prices to remain flat for rest of year

The major UK lenders expect house prices to be broadly flat over the coming year and for mortgage lending to increase moderately, shows the Bank of England’s Trends In Lending report.

On the supply side, a balance of lenders reported that the amount of new mortgage lending available to households was broadly unchanged in 2010 Q1. Within that, mortgage availability increased slightly for borrowers with high LTV ratios.

Looking forward, respondents expected the availability of mortgages to remain broadly unchanged over the next three months, with a small increase expected in maximum LTV ratios.

Demand for remortgaging was reported to have fallen in 2010 Q1, for a fifth consecutive quarter.

Although an increase in remortgaging activity was expected in the Credit Conditions Survey, in recent discussions the major UK lenders expected such activity to remain low, which some lenders saw as partly reflecting a lack of incentive to move from low standard variable rate mortgages, to which many shorter fixed-term mortgages had reverted on expiry.

Findings from the survey also shows that gross lending for house purchases increased in March to £9.9bn, up from £9.6bn in February

The availability and pricing of new mortgages was broadly unchanged in 2010 Q1, according to lenders in the Credit Conditions Survey.

Demand for secured credit for house purchase was reported to have fallen over the same period, largely reflecting one-off factors, but was expected to increase in Q2.

The flow of net mortgage lending by all UK-resident mortgage lenders was little changed in February at £1.6bn. Both the annual and three-monthly rates of growth of the stock of lending were stable.

According to Lending Panel data, net mortgage lending by the major UK lenders was broadly unchanged in March.

Lending Panel data provide a split of gross lending between house purchase and the refinancing of existing mortgages.

Gross mortgage lending for house purchase rose slightly in March, though remained below monthly flows seen towards the end of 2009. Remortgaging activity remained weak.

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  • RICHARD PERRY, PRIVATE FINANCE LTD 22nd April 2010 at 3:28 pm

    I would have to say that I have seen an increase in the remortgage enquiries recieved over the last 6-8 weeks and have been able to make use of some reasonably keen long term fixed rates for the more cautious of clients. I am relatively happy with reports of stable lending and stable house prices for the rest of the year, at worst it keeps confidence that the market is recovering. I have to say there are more enquiries for the high 6 and 7 figure mortgages now that people are looking to buy when the prices are still low in comparison to a few years back, they have been waiting for stability in the housing market and now hopefully it will continue.

    As long as it doesnt go into reverse I think things will slowly get better and as always a positive outlook and positive reporting will of course help..