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.
Housing market indicators have continued to be strong over recent months, once seasonal factors are taken into account.
First-time buyers have benefitted most from the government’s Help to Buy initiatives, with the more recent mortgage guarantee scheme now starting to push average loan-to-value levels higher.
The housing market got a further boost from this week’s Budget. This, together with benign developments in the economy more widely, should bolster short-term sentiment and activity.
Bank of England signals bank rate to stay at ½% for some while yet and a lid on interest rate rises for several years to come.
The strong pace of mortgage lending seen in the closing months of 2013 persists into January, with gross lending of £15.5 billion a third higher than a year ago.
Further evidence that Help to Buy is well-targeted, mostly helping first-time buyers living outside London and the south east.
Short-term growth prospects for the housing market and the wider economy look very positive.
Mortgage lending was stronger than we expected in the closing months of 2013, but lenders expect little if any boost to borrower demand this quarter.
Bank of England governor Mark Carney sees growth in housing transactions and mortgage lending slowing from 2015, a view we share.
A stronger jobs market and better credit availability are supporting a recovery of the housing market. This is from a low base, and the strong upwards momentum looks set to continue through 2014.
Gross mortgage lending may grow to more than £200 billion by 2015, for the first time since 2008, helped by a continuing recovery in remortgage activity from 15-year lows as well as stronger housing market conditions.
We see little evidence of an unbridled housing boom developing. Indeed, given the already stretched nature of household finances, new regulatory environment and likely future course of interest rates, housing market activity may well ease back of its own accord.
There is a possibility that too much importance has been ascribed to the impact of the Help to Buy mortgage guarantee scheme. While it brings forward a return to higher LTV lending, and so eases the position of those looking to purchase or move home under their own steam, it seems likely to directly help a relatively narrow profile of buyers, given the new regulatory regime.
Our forecasting horizon embraces a period when the Bank of England may consider increasing interest rates. While we see this as more of an issue for 2016 and beyond, the benign period of falling arrears and possessions may be coming to an end.
We do not expect the Bank to move quickly to raise interest rates, once the UK passes the 7% unemployment threshold
Housing activity is set to strengthen further in the short-term, and to contribute materially to overall economic growth
The launch of the government’s Help to Buy mortgage guarantee scheme takes place against a recovering housing market and economy
It is too soon to gauge how much extra housing and mortgage demand the new scheme will stimulate
Regulators appear unperturbed about current housing market developments, but are monitoring closely, in case risks to financial stability surface
Prospects for the UK economy continue to brighten, although there is a risk that expectations are running too high.
The housing market is in the early stages of what appears to be a relatively benign and broad-based recovery.
With little pick-up in net lending to individuals, talk of housing booms is premature, and speaks more about housing supply shortfalls than the current strength of demand.
An improvement in sentiment and activity continues to show in the UK housing and mortgage markets, with a more positive picture starting to emerge in the economy also.
Our forward estimate of gross mortgage lending in July reinforces a growing evidence base of a strengthening in the housing and mortgage markets.
The signals from the Bank of England about its likely response to an improving economic picture give somewhat greater confidence as to the likely path of future interest rates, although with the built in get-outs and caveats this path remains far from certain.
The Bank of England has given its clearest signal to date that higher interest rates remain a long way off.
Improvements in the cost and availability of mortgage credit are underpinning a meaningful recovery in the housing market. In recent months, we have seen the strongest performance for mortgage lending since 2008.
Favourable conditions in the housing and mortgage markets look set to continue for some while.
The imminent change of guard at the Bank of England takes place against the backdrop of a modestly improving UK economy, albeit one that appears to rest upon a pick-up in consumer spending and a recovering housing market.
Funding conditions, helped by the funding for lending scheme, continue to look favourable and are supporting more competitive mortgage pricing and availability and a gradual resumption of lenders’ risk appetite.
Our forward estimate of gross mortgage lending in May resonates with other survey evidence of strengthening house purchase activity. It also suggests that the long-term contraction in remortgage activity may be drawing to a close.
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