New figures from the Bank of England show that UK mortgage approvals have risen to the highest level in almost one year, suggesting that the government’s Funding for Lending Scheme is fulfilling its goals of boosting the mortgage market by making more money available to home buyers.
It was reported that the number of mortgage approvals in December totalled at 55,785, a rise of over 3% in comparison to figures taken from the previous month, where there were 54,011 mortgage approvals throughout November. The increase was described as ‘above analysts’ expectations’, as mortgage approvals in December 2012 were the highest since the beginning of the same year in January 2012.
The positive indication of an improving mortgage market came alongside a reported rise in net mortgage lending, which had increased by £1,036 billion since April. The Bank of England also confirmed that interest rates on new mortgage loans had fallen to their lowest level since April too.
Experts are suggesting that the Funding for Lending Scheme, which was launched by the Bank of England in an attempt to boost the recovery of a declining economy by increasing credit flow to households and businesses, could continue to reflect positively on the mortgage market. The analysts have made predictions that, through the effects of the scheme, the best two year fixed rate product could continue to decrease to as low as 1.5%.
Despite positive signs that the British economy is improving, some specialists have commented that mortgage approvals remain low in comparison to previous norms. Howard Archer, an economist at IHS Global Insight, stated that since 1993, mortgage approvals averaged at 85,648 per month.
Regardless of this, it would appear that Mortgage Lenders are taking relevant steps to boost the level of mortgage approvals in 2013. Last week, Lloyds banking Group declared that they would commit to lending £6.5 billion to help customers get onto the property ladder during 2013. This pledge is set to help 60,000 consumers into their first home throughout the year.
In addition to this, it would appear that overall affordability of home loans are also improving. Recent research from contractor mortgage lender Halifax found that mortgages were at their most affordable in a decade due to declining house prices and reductions in borrowing rates. Halifax reported that, in the final quarter of 2012, mortgage payments made up 28% of a new borrower’s disposable income. This suggested a significant boost in terms of the affordability of home loans, particularly when compared with figures taken from the third quarter in 2007, where mortgage lending made up almost half of a borrower’s disposable income at 48%.
Matthew Long, a Senior Mortgage Consultant at Contractor Mortgages Made Easy comments “With so many positive improvements in terms of mortgage affordability and availability, contractors are certainly set to benefit from competitive new options when looking to secure mortgage funding. It is always prudent, however, to ensure that lending criteria is established upfront to avoid common pitfalls in the application process such as a reduction in borrowing or an adverse lending decision.“
As a contractor, seeking professional mortgage advice and guidance can help to ensure that income will be assessed based on full gross contract value, allowing them to maximise borrowing potential and take advantage of a mortgage market which is clearly making steady progress.
Article by: Jennifer Birks, Media Executive at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
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