Market commentary

Market Commentary is our monthly analysis on the UK mortgage markets, released on the same day as our gross advances press release. Below is a listing of our most recent commentarys.

  1. 23 January 2012

    The closing months of 2011 saw stronger mortgage lending activity and housing transactions. But this was from low levels, and we would not read too much significance into these recent figures. Immediate economic prospects are challenging and suggest a weak first half for the housing market. Inflationary pressures have started to fall away sharply, raising hopes that real incomes may stop falling later this year. Looking a little further ahead, there now seems to be a reasonable prospect that real incomes could stabilise and perhaps even start rising moderately by the end of the year. This would boost consumer confidence and help to kindle house purchase demand. The Eurozone crisis continues to make funding conditions challenging and exposes mortgage pricing to upside risks.

  2. 15 December 2011

    Short-term economic prospects, and so the outlook for the housing and mortgage markets, are challenging and highly uncertain. The future pricing and availability of UK residential mortgages is closely tied to wholesale funding developments, and so in turn relates to how effectively the Eurozone deals with its sovereign debt problems. Our central forecast assumes that there will be a resolution, but this leaves considerable upside and downside risks. Our central view is that housing transactions and mortgage lending activity will be broadly flat next year, continuing the subdued pattern of the past few years. Consumer confidence is currently at a low ebb, which suggests that borrower appetite may be muted – particularly for house purchase - at least until real incomes show signs of stabilising. Recent government housing initiatives should help to boost the proportion of house purchases made by first-time buyers, but their overall market impact depends upon ongoing mortgage credit availability. The household sector has been under financial pressure for some time, as a result of falling real incomes, and more recently higher unemployment. This is likely to unwind some of the improvement in mortgage arrears we have seen over the past two years and lead to a somewhat higher level of possessions in 2012.

  3. 18 November 2011

    Eurozone problems have damaged short-term economic prospects for the UK, and increased the likelihood of further quantitative easing by the Bank of England. The modest revival in mortgage lending activity over recent months seems in danger of evaporating unless wholesale funding markets improve. The forthcoming housing strategy and autumn statement may introduce measures that provide a fillip for the housing market.

  4. 20 October 2011

    Mortgage lending activity has picked up modestly in recent months, but the recovery is from low levels and may be short-lived. Short-term economic prospects for the UK and many other developed economies are not favourable. The Bank of England has resorted to fresh quantitative easing to help counteract any adverse effects on credit availability stemming from eurozone difficulties.

  5. 20 September 2011

    UK economic prospects appear closely tied to how effectively eurozone policy-makers resolve Greece’s sovereign debt problems over the coming months. Over the coming months, we may see renewed quantitative easing in a number of major developed economies, including the UK, in an effort to cushion slower economic growth. Once seasonal factors are stripped away, the underlying position for the housing and mortgage markets is broadly stable, but with subdued levels of activity and downside vulnerability to bad economic news.

  6. 18 August 2011

    UK economic prospects have deteriorated as a result of weaknesses in some of the major economies and renewed stresses in the eurozone area associated with the sustainability of government finances. As a result, UK interest rates look like staying lower for longer. Housing market conditions remain subdued, but pretty stable. Seasonal factors continue to provide some support, but underlying house purchase activity may drift lower over the coming months.

  7. 20 July 2011

    The UK economy continues to experience disappointing economic growth, strong consumer price pressures, falling disposable incomes and an uncertain jobs market. This backdrop weighs negatively on purchase decisions relating to home ownership. By contrast, landlord activity appears to have picked up recently and, with evidence of strong rental demand, this should help to underpin activity over the coming months. UK households have made progress in bringing down debt burdens over the past year or so, but this largely stems from the restricted levels of new mortgage lending, unsecured write-offs and nominal income growth. Households in aggregate are not repaying their mortgage debt more quickly. Recent emotive headlines on repossession prospects appear overplayed, given that the state of our economy does not warrant large interest rate rises for the foreseeable future. But we do expect to see moderately higher arrears and possessions through the second half and into 2012, given the poor state of household finances and limits to how long borrowers with long-term difficulties can be nursed along.

  8. 20 June 2011

    After low levels of activity in April, mortgage lending recovered in May but remains essentially flat when seasonal factors are considered. The support from stronger remortgage lending is likely to dissipate as expectations of higher interest rates this year retreat. In the wider economy, a slowdown in manufacturing, export growth and household spending emphasise the current weakness of economic activity.

  9. 20 May 2011

    The underlying performance of the economy is better than the Q1 GDP figures suggest, although consumer spending appears to be pretty flat. Despite re-kindled inflationary pressures, the prospect is for interest rates to start rising more slowly than seemed likely a few months ago. The immediate direction of house purchase and remortgage activity is uncertain, but there are few signs of the housing market stalling.

  10. 20 April 2011

    There has been a growing awareness concerning the poor state of household finances in recent weeks. Short-term economic growth prospects - already unexciting - seem vulnerable if consumers decide to retrench further. For this reason, we think that the MPC will hold off from increasing base rate until August. There are few signs of distress in the housing market, but activity levels look set to remain pretty weak over the coming months.

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