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Guaranteed rent | UK March Mortgage Lending Surges, But Slowdown Expected Ahead

Guaranteed rent – 3Let allows you to guarantee your rent for a term of 1 to 5 years

U.K. gross mortgage lending surged 30% in March from February, but now that the first-time buyer tax break has ended, and lenders are introducing higher mortgage rates, housing market activity is expected to slow in the coming months, survey data showed Monday.

The Council of Mortgage Lenders said gross mortgage lending totaled GBP13.4 billion in March, the highest total since September last year and compared with GBP10.3 billion in February, and was 17% higher than the GBP11.4 billion recorded a year earlier.

But a separate quarterly survey from the Bank of England reports that after an increase in the cost of secured borrowing in the first quarter of 2012, a further increase is expected by lenders between April and June.

“The increase in our March lending estimate appears to be almost entirely due to stronger house purchase activity,” said Bob Pannell, the CML’s chief economist.

“The most likely explanation is that buyers wanted to complete their transactions before the end of the stamp duty concession on 24 March,” Pannell said, adding that a drop in housing transactions over the coming months wouldn’t be a surprise.

The BOE’s trends in lending survey, meanwhile, showed that the availability of secured loans for consumers was steady in the first quarter of the year compared with the final three months of 2011. But, after an increase in the cost of borrowing between January and March this year–which reflected a buildup of higher funding costs–the BOE’s report showed that lenders are predicting a further increase in the coming three months.

And, as well as charging higher interest rates, respondents said they expect a decrease in the availability of secured credit and an increase in demand for it.

The outlook for the housing market remains steady, however, with major U.K. lenders expecting house prices to be little changed over the course of 2012, the BOE report said.

However, with two new government house-buying schemes in their infancy, housing market activity–if not prices–looks likely to slow as would-be home buyers, particularly first-time buyers, face the prospect of having to stump up a large deposit of around 30% in order to secure a mortgage, and even bigger if they are to take advantage of the cheaper deals.

Source: http://www.foxbusiness.com/news/2012/04/23/uk-march-mortgage-lending-surges-but-slowdown-expected-ahead/

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