Mortgage lending continued to rise last month – but experts say that the outlook for the market is “subdued”. According to the Council of Mortgage Lenders (CML), which represents institutions responsible for 94% of residential mortgage lending in the UK, the total value of new loans stood at £13.6 billion in July. The figure, which includes remortgages, is up 5% on June – but down 3% compared with a year ago.
Industry insiders point to a number of factors affecting the market. The second half of 2009 saw increased activity as house purchasers hurried to take advantage of the first stamp duty holiday. Now, apart from the usual summer lull, conditions have become more challenging. According to the latest Bank of England survey, lenders expect the cost of funding mortgages to rise.
Lenders are showing caution, while some have tightened their criteria, making things trickier for the self-employed or first time buyers, for example. In that environment, an experienced broker with knowledge of the market can be invaluable in finding the right deal.
As CML chief economist Paul Samter points out, there is still good news for borrowers. Low interest rates continue to make mortgage borrowing affordable by historical standards, with competitive fixed-rate deals attracting particular interest. “The vast majority of households continue to pay their mortgages in full every month, and many have benefited from the record low interest rates,” Mr Samter commented.
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