Mortgage lending holding steady

Story link: Mortgage lending holding steady

Mortgage lending is remaining steady at present, but while much has been made of the recent rise in mortgages being taken out, volume is still far below the averages before the credit crunch hit.

Mortgage lending holds up in September

Latest figures from the Council of Mortgage Lenders (CML) show that in September, one third of first-time buyers benefited from the current stamp duty holiday.

There were 6,200 first-time buyer loans for properties priced between the old starting rate of £125,000 and the temporary threshold of £175,000, representing 32% of 19,700 first-time buyer loans approved.

September 2009 saw lenders sanction 50,600 loans for house purchases in total, up 2% on August and 43% on September 2008; remortgage volumes rose 10% on August, to 33,000, but were down 48% on a year earlier.

While the mortgage market is relaxing back more, many lenders are still demanding a 25% deposit, with a recent survey suggesting that at least two-thirds of all mortgage products currently on the market require this as a minimum deposit.

One lender that is bucking the trend is the Nationwide Building Society, which recently announced a raft of upsell measures, offering discounts on a variety of financial products to existing customers at a discount.

One key feature of this is mortgages available with just a 5% deposit, which is certainly a good sign, not least because the Nationwide is the second largest mortgage lender:

* From 30 October, Nationwide will reward existing customers who use FlexAccount as their main current account, with access to competitive mortgages up to 90% LTV.
* The range of competitive mortgages will support first time buyers and home movers without a large deposit.
* For existing mortgage customers moving home, the offer represents a discount of 0.70% off the current range of mortgages available to them at 90% LTV (existing customers moving home range, 85-95% LTV tier).
* Each of these products are available with and without free legal fees, covering the conveyancer’s professional charges relating to the house purchase.
* Rate and reservation fee is identical for each of these options.
* These offers are available to eligible existing customers moving home and first time buyers.
* These offers are available through the Nationwide branch network only.

The question is, how many other lenders will follow suit? Especially considering that the RBS and Lloyds Group are getting direct funding from the UK government to lend, but are still lending more restrictively than non-nationalised banks.

Inflation rise in UK

Story link: Inflation rise in UK

Inflation is on its way up in the UK, reaching 1.5% for October:

UK inflation rises to 1.5% in October

The Office for National Statistics has today announced that Consumer Price Inflation (CPI) rose for the first time in eight months to 1.5% in October from a 5-year low of 1.1% in September.

The rise was not unexpected after a sharp fall in transport costs last year was not repeated this year and because fuel prices had seen record falls this time last year.

The real question everyone will be asking is whether this is simply a technical rise, which will continue a few more months before falling back again – as the Bank of England believes – or whether this is a sign of inflation about to run out of control.

There are two main camps for the latter – one thinks we face deflation in the near term, while the other thinks we face hyper-inflation in the medium term. Both camps are not, however exclusive.

That means you can be sure inflation is going to be watched even more closely than ever, for warning signs of one or the other scenario playing out.