Mortgage boom grows as house prices keep soaring
BRITAIN’S housing boom grew again in January as mortgage lending hit new post-crisis highs, the Council of Mortgage Lenders reported.
The boom in lending came along side soaring prices – in London the average house cost £450,000 in December, up 12.3 per cent on the year.
The intense pressure in the market could lead the Bank of England to cut back the Help to Buy mortgage guarantee scheme, to stop the market overheating.
But there were some signs the housing shortage could begin to ease as construction levels increased.
Construction started on 122,590 houses in England 2013, official figures said, up 23 per cent on the year.
Banks and building societies gave out £177.4bn in home loans in 2013, 23 per cent higher than in 2012 and the highest since 2008.
Much of that jump came in the second half of the year – in the final quarter £51.4bn of mortgage loans were given out, a jump of 36 per cent on the year.
The rise continued into January. In the first month of the year alone mortgage volumes hit £15.5bn, up 33 per cent on the same month of 2012.
Economists believe the sustained boom in lending will push prices high er despite the rise in construction, and could even prompt tougher policy action from the Bank of England.
“We expect house prices to increase by around eight per cent in 2014 with gains across the country,” said Howard Archer from IHS Global Insight. “While the Bank of England currently does not currently see excessive house price rises outside London, we believe the bank will take further action later this year to try and dampen the housing market.”
That could mean cutting the Help to Buy threshold so the loan support only applies on houses worth up to £300,000, not £600,000 as is currently the case.