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The housing market made further steps towards recovery today after mortgage lending showed its first annual increase since early 2007.
The Council of Mortgage Lenders said 56,000 loans totalling £7.5 billion were extended for house purchase in July — up from 47,000 loans worth £7.1 billion in July last year.
It was the first year-on-year increase in loans for house purchase since before the boom in the housing market of the past decade turned to bust two years ago.
However, the number was still sharply down on 96,500 loans made for house purchase in July 2007 at £15.2 billion.
CML economist Paul Samter said: “It's tempting to call the turn in the mortgage market at this point, and there is certainly concrete evidence that lending for house purchase is increasing.
“But there are still constraints affecting the lending industry's capacity to fund increased lending, as well as less consumer motivation to re-mortgage for the time being.
“The overall lending picture is likely to stay relatively subdued for some time, especially as the wider economy is far from robust as yet.”
The influential Ernst & Young Item Club also warned that increases in house prices in recent months were “a false dawn” and said values will not return to their 2007 peak for at least five years.
Hetal Mehta, senior economic advisor to Item, said: “Price rises largely reflect the acute shortage of available properties, with many homeowners either trapped in negative equity or reluctant to sell for fear of locking in the losses of the past two years.
“A small number of cash-rich buyers have supported prices, but the supply of these funds is limited, which means prices are likely to dip again in the first half of next year.”
Reader views (3)
Black October will squash the housing price blip - come back in 2014 for a genuine quote.
- Ted, London
People don't posess property - it posesses them! Fitted bathrooms, bedrooms, kitchens etc and debt debt debt. How absolutely boring it all is. Instead of calling it "mortgage lending" why not call it "debt enslavement".
- Fred, London
Increases in property values is unearned income - and does no-one except the banks and the greedy any good.
Think of any other increase in the price of a necessity being welcomed - food prices, for example, do we all cheer at the possibility that the next generation could not afford a square meal and would be undernourished, whilst the ones before, already overweight has hordes of food in their larders - of course not.
High prices for HOMES is a bad thing - only those who have grown fat on the property casino or the banks and their parasitic spivs would think otherwise, greed and money for nothing in a rising market , which, incidentally also forces rents up.
And for all those who think they are going to be able to leave their "hard earned" property to their ungrateful grandchildren - think again, the country is broke, it`s "value" (and NOT the TAXES of those who cannot afford to buy) is gonna have to somehow subsidise you`re old age.
And why not?
- Darius, London UK
