Lenders optimistic on mortgage availability

| October 22, 2009 | 0 Comments
”Lenders

Despite a dip in mortgage lending during the third quarter of 2009, banks and building societies expect the availability of mortgages to improve in the months ahead.

According to the Bank of England’s latest Trends in Lending report, a net balance of lenders expect mortgage availability to rise “somewhat” during the final quarter of the year.

Optimism among lenders apparently reflects “perceptions” of a better outlook for both the UK economy and house prices.

In addition, falling default rates could contribute to a keener lending environment, although the bank says defaults are still expected to rise further.

Mortgage approvals for house purchases were broadly unchanged in September, although demand was reported to have risen.

Meanwhile, new mortgages cost more in August, with a typical rate at 4.3%, compared with 4.2% in July.

Commenting on the report, the Council of Mortgage Lenders (CML) says it confirms a continuation of the “two-speed” mortgage market, with lending for house purchases continuing to increase and remortgaging remaining weak.

The body’s director general, Michael Coogan, adds that funding conditions remain challenging, despite slight improvements in wholesale funding markets.

He concludes rather gloomily: “Today’s report very much confirms our own assessment of market prospects - the most likely scenario is a slow and long-drawn out recovery.”

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