Interest rates appear set to remain low for some time to come.Nick Barnes, Head of Research
Having dipped in September, gross mortgage lending rose 5% in October to reach £19bn. This is the highest October lending figure since 2008, although the July figure was higher at £19.8bn.
Data from the Council of Mortgage Lenders (CML) shows that new loans to first time buyers in Q3 were 3% up on Q2 and 15% higher than in Q3 2013. Loans for home movers were likewise higher in Q3 – by 12% compared to Q2 and by 10% compared to Q3 last year. Buy-to-Let loans also rose – by 12% on a quarterly basis and by 18% compared to Q3 2013.
The Bank of England has introduced further new rules on bank safety nets which some industry leaders say could result in increased mortgage costs. By 2019 the minimum amount of capital banks must hold relative to their loans (known as the leverage ratio) could rise to 4.95% from the current 3% requirement. That would mean banks have to hold £1 of capital for every £20 they lend, compared to £1 for every £33 under current rules.
NB comment: Mortgage lending rose in October although the proposed increase in regulatory control from the Bank of England on the residential mortgage market is likely to constrain lending going forward - even without the uncertain impact of the EU Mortgage Credit Directive which is due for implementation by March 2016. Meanwhile interest rates appear set to remain low for some time to come.