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Research article

Chrome October 2014 - Mortgage market

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The recent drop in inflation has prompted predictions that interest rates will not now rise until next summer.

Nick Barnes, Head of Research

Report Highlights

  • Latest Council of Mortgage Lenders’ data show that mortgage lending in September declined slightly compared to August.
  • The average loan-to-value for first time buyers in August was 83%, compared to 70% for home movers.
  • The Bank of England has accepted new powers to prevent extreme fluctuations in the housing market.

Stormy Cloudy Settled Fair Fine

Latest Council of Mortgage Lenders’ data show that mortgage lending in September declined slightly compared to August, only the second month-on-month drop in house purchase lending volume since February this year. Total gross lending in September was £17.8
billion. This was 1.5% lower than August but 10.2% higher than September last year.

The Bank of England has accepted new powers to prevent extreme fluctuations in the housing market whereby it will be able to impose limits on the amount borrowed by reference to a loan-to-income ratio. The Bank’s Financial Policy Committee (FPC) already has the power to make recommendations about loan-to-income ratios, but it has no power to enforce them. The new powers will also cover buy-to-let mortgages to ensure that landlord income is greater than the interest payments on their mortgages. The new powers are expected to be in place before June next year.

NB comment: the recent drop in inflation has prompted predictions that interest rates will not now rise until next summer. This seems bold given that the factors governing a change in Bank Rate can change quickly. Moreover, even if Bank Rate remains unchanged, high street lenders can still raise their rates if they so choose. Assuming rates remain favourable, this will extend the current cycle in
the sales market.

For the full report please click on the link below.

 

 

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Oxford Street Article Details

Contributed by

Nick has more than 20 years’ experience within the property research arena.

Nick Barnes

Nick Barnes

St Magnus House

020 3040 8406