The United Kingdom is experiencing its strongest growth in new mortgages in several months. However, lending levels remain at historic lows, and there is concern over the lack of lending to first-time homebuyers. For more on this, see the following article by Property Wire.
The number of property loans approved in the UK rose over 15% last month bringing much needed hope to the struggling real estate market.
The figures from the British Bankers’ Association show that mortgage approvals rise 15.8% in May, ending months of decline although the level of lending is still at historic lows.
But it is a sign that the property market is stabilizing. Net mortgage lending rose by £2.3 billion compared with a £2.5 billion rise in April to take levels to their best level for a year.
‘Steady monthly increases since last November have seen the number of loans approved for house purchase recover to levels seen in early 2008, although gross and net mortgage lending show a subdued wider mortgage picture,’ said David Dooks, BBA statistics director.
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‘This pick-up in demand is broadly consistent with the rise in buyers inquiries signaled in our monthly housing market survey. Indeed, the continuing strength of the latter series suggests that property transactions could rise a little further over the coming months,’ said Royal Institute of Chartered Surveyors chief economist Simon Rubinsohn.
But there is still concern about the amount of lending to first time buyers who are regarded as the key investors in terms of a real estate market recovery.
‘The continuing lack of mortgage finance for first-time buyers allied to a diminishing stock of instructions on estate agents books remain very real issues for the property market to deal with,’ added Rubinsohn.
He predicted that a move back to 40,000 mortgage approvals per month on the BBA data is conceivable by the end of the year but this compares with an average of 63,000 in 2005, 57,000 in 2006 and 69,000 in 2007.
Although the number of property loan approvals are rising it is the million pound plus sector of the real estate market that is suffering according to an analysis of the figures by a specialist large-loans mortgage broker.
Largemortgageloans.com says there has been a dramatic fall in sales of the UK’s more prestigious homes with sales of properties costing in excess of one million pounds down by 41% in 2008. Only 5,302 transactions were completed, compared with 9,003 in 2007.
This article has been reposted from Property Wire. You can also view the article at Property Wire, an international real estate news website.