At the moment, statistics are positive. Gross mortgage lending hit its highest level since 2008 – as did high LTV loans.
November was the strongest month for house purchase mortgage approvals since January 2008, as the number of home loans topped 70,000 for the first time since the financial crisis. Figures from the latest Mortgage Monitor from chartered surveyors e.surv show there were 71,920 house purchase approvals in November, a 6 per cent increase on October and 34 per cent higher than a year ago, when the number of loans approvals numbered 53,539.
The increase in approvals follows the release of new data from the Bank of England showing that net lending through the Funding for Lending Scheme tripled in the third quarter of the year. Net lending by banks using the scheme climbed to £5.8 billion between July and September, compared to just £1.6 billion between April and June.
Mortgage lending hit a five-year high of £17.6bn last month, a five-year high and up 37pc from £12.9bn a year before. The CML said the figure was the highest monthly estimate for gross lending since October 2008. Gross lending rose 9pc from £16.2bn in September.
Take a side step away from the mortgage market, house prices continued to increase across England and Wales. House prices are £11,219 higher than a year ago, meaning they have risen at the fastest rate for three years, according to the latest house price index from LSL Property Services. On a monthly scale, prices rise by £1,400 in November, reaching a new record. On an annual basis prices increased in all regions for the second consecutive month, with sales set to be 16% higher than 2012 by the end of this year.
The CML predicts that activity in the housing market is set to increase in 2014 but that an unbridled boom in the housing market is unlikely.
I think they’re being too bearish.
House prices are heading skywards, catapulted upwards not only by the impact of the international super rich on the prime London property market but also by thriving lending in the South East and London. Prices haven’t yet maxed out, and growth will continue into 2014, with house prices rising 5% over the course of the year.
I’d be more positive still but there are two problems on the horizon that may queer the proverbial pitch.
First, unemployment. It’s currently falling far faster than predicted. Expect a base rate rise of up to 1% towards the end of the year. Although data from Adzuna, the search engine for jobs shows salaries aren’t really pushing north again yet, their monthly jobs index does show the supply of workers is beginning to look quite so out of kilter with the demand.
Second, foreign money is fickle. With London prices high, when that prop get kickedout from underneath the market the link between property prices and earnings will regain some of its relevance. And that will force a correction on the market.
