20% rise in mortgage lending in February
Recent figures have shown that there was a 20% year-on-year rise in mortgage lending in February, giving a little more hope to the mortgage and property markets, who have been suffering in the early part of this year due to the weak economy and necessary changes to lending rules and restrictions.
Although this rise does seem to provide a glimmer of hope to those concerned about the state of the mortgage market, experts suggest that this is an unnatural rise due to the stamp duty holiday for the most part. The figures do seem to agree with this idea, as one fifth of all lending in February was to first time buyers, a number which rose by 8% from the previous month also. The stamp duty holiday was well publicised as a way to bring new homebuyers to the market and give those who may otherwise have not considered buying their own property help onto the property ladder. As stamp duty tends to come to 1% of the total property value, and is an amount which needs to be paid upfront when you buy a home, it can be seen as one of the costly fees which put off buyers, in particular the young, who may already be struggling to raise a deposit and arrangement fees.
Naturally, with the inception of the stamp duty deadline, there was a noted rise in first time buyers and the property market seemed to be booming for a while. However, the stamp duty holiday ended in March and there has been a huge decline in the numbers of first time buyers on the property market. Not only this, but lending in general has taken a downturn, and the mortgage market is suffering. Lenders are pulling back on their mortgage products and in order to obtain a mortgage, borrowers are expected to have far better credit scores and higher deposits than before. This may make mortgages solely available to those in good financial positions and who have not gotten into debt before, not only discounting those with bad credit ratings and mortgages for contractors, but also a majority of people in the UK, who are likely to struggle with a higher deposit.
This is likely to make a difference to the mortgage market as a whole, and although recent figures may suggest that the mortgage market is returning to what it was pre-recession, experts believe that it is likely to decline again before it gets better.
Article by: Taj Kang, Associate Director at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager.
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