Comment on the Bank of England's lending figures for July 2011

Published:

30/08/2011

Topic:

Press Release,Mortgages

Commenting on the Bank of England's lending figures for July 2011, Kevin Mountford, head of banking at moneysupermarket.com said:

"July's rise in lending to house buyers is good news not only for consumers, but for the health of the housing market as a whole. However, it is only one of the factors which will help with the housing market recovery. As we have seen from figures released today by The National Housing Federation (NHF) there is a chronic shortage of affordable homes in the UK, with many prospective homeowners being priced out of the market by the high cost of house buying and restrictions on lending.  Although we have started to see providers reducing mortgage rates and increasing the availability of competitively priced mortgages to those with smaller deposits, the best deals are still reserved for those with larger deposits or equity in their homes. An increase in general lending would be a boost for the economy, reducing the gulf between those who can buy and those who cannot, however the industry needs to ensure any lending is done responsibly.

"Consumer confidence in the housing market is low and the lack of first time buyers being able to step onto the housing ladder is now a major barrier to recovery. The size of deposit required for a competitive mortgage is still out of the reach of most first time buyers and yet from a pure affordability perspective their mortgage repayments would be lower than current rental values. Meanwhile, the lack of first time buyers is restricting those home owners who want to 'trade up' and this has a knock-on effect on the whole market.

"If you have enough equity in your home, then now is a great time to take advantage of renewed competition in the mortgage market. However, for those struggling to get on the housing ladder, it is worth considering other options, such as shared ownership, borrowing from family, guarantor mortgages or new build home buying schemes."

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