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UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to www.ukfinance.org.uk for wider content and updates from UK Finance.

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Outlook for 2013 is "more stable and positive"

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Published: 13 December 2012 | Author: Bernard Clarke

Lending for house purchase picked up again in October following a slow September, according to data we published earlier this week. 

The increase in buying activity was most pronounced among first-time purchasers, but movers were also more active in the market. Overall, the number of loans for house purchase was 14% higher than in September and 10% up on October 2011.

Remortgaging in October also reached its highest level for six months, although it remains modest overall (and is currently around one-third of its peak in 2007). It is possible that remortgaging data is showing some early effects of the Bank of England’s funding for lending scheme (FLS). The impact of the scheme on remortgaging may potentially be seen more quickly than any effect on house purchase lending because of the longer time lag in buying a property.

Overall, however, it is still much too early to judge the impact of the FLS. The scheme was only launched in August, and firms will be able to draw on it for 18 months. It is also important to stress that it is not targeted at mortgage lending in particular, but intended to boost the availability of all types of credit to businesses and individuals.

So far, we have data for only three months since the launch of the scheme, a period much too short to judge its effects, even on remortgaging. In the coming months, it will remain difficult to interpret its impact because data will be affected by the usual seasonal factors, making it difficult to discern underlying trends.

We believe, however, that the more positive data for October suggest that the underlying trend of modest year-on-year growth will continue. If that is correct, we believe that the outlook for mortgage and housing markets in 2013 is more stable and positive.