Slump in home loans expected to be temporary

Chris Papadopoullos
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“Consumers continue to be the winners of the mortgage price war” (Source: Getty)
Agents and brokers are expecting a pick up in mortgage lending this year after a sluggish end to 2014.

Meanwhile, one of the UK’s most-watched house price indicators has changed hands.

Gross mortgage lending was 8.1 per cent lower in the final three months of 2014 than in the three months to September, according to new survey figures released by the Bank of England yesterday.

The slowdown in the housing market at the end of 2014 was also shown in the Halifax house price index, which has now been sold to financial services firm Markit. The index has been a key guide to house prices for over three decades.

The Halifax house price index shows the UK went through a housing boom last summer before losing steam.

However, annual price growth remains high at around eight per cent and could be supported by cheaper lending and stamp duty changes.

“Consumers continue to be the winners of the mortgage price war,” said Brian Murphy, head of lending at the Mortgage Advice Bureau.

“In a low rate environment – and with a base rate rise pushed further back on the horizon – borrowers are increasingly willing to take on variable rates, with the proportion of advances at fixed rates falling for the first time in over two years.

“However, rates will eventually hit the bottom of the curve so timing is crucial: failure to lock in to today’s record low rates could prove costly in the long term.”

“Demand is beginning to blossom in 2015, as consumer confidence grows,” said Adrian Gill, the dir­ector of Your Move and Reeds Rains estate agents.

“Slashed stamp duty fees and more gradual house price growth are bringing homeownership closer within reach of aspiring buyers, while at the same time rock-bottom inflation and competitive mortgage deals are giving borrowers a boost.”

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