Outlook good for mortgages as market continues to grow


The Bank of England yesterday said that mortgages are getting cheaper and banks are issuing more of them, a trend lenders expect to continue in coming months. In its quarterly Trends in Lending report, the Bank said that increased consumer confidence and cheap funding costs as a result of Funding for Lending are combining to boost the housing market.

Lenders are clearly demonstrating an increased appetite to lend and are having to do so at higher loan-to-values if they wish to compete.

Those who can afford to, continue to overpay on their mortgages – a sensible strategy when you consider that interest rates won’t stay low forever.

While there is more choice of mortgages at higher loan-to-values, with property prices continuing to rise in parts of the country, particularly London and the south east, the question is whether this is going to hamper the number of first-time buyers who are able to get on the housing ladder. Although lenders reported that they felt house prices would be little changed or increase slightly in coming months, there remain fears that Help to Buy will fuel a house-price bubble as the lack of new homes being built is not being addressed.

Jonathan Harris
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Jonathan Harris