Mortgage approvals still subdued

29 June 2011 Last updated at 11:48 GMT House sales look likely to remain very low The UK property market is set to remain subdued in the coming months, figures from the Bank of England suggest.

New mortgages approved for house purchase, but not yet lent, rose to 45,940 in May from 45,447 in April.

Despite the slight increase, May's approval figure was lower than the average for the previous six months.

The data suggests that house sales, which have been running at half their pre-2007 levels, will also stay low in the coming months.

Meanwhile, building societies have complained again that National Savings & Investments (NS&I) is being too agressive in trying to attract savers' money.

NS&I recently relaunched its inflation-proofed investment policies.

The Building Societies' Association (BSA) said this had contributed to another outflow of funds from its members in May, of ?613m.

Adrian Coles, director general of the BSA, said: "Savings balances at mutuals fell in May, in common with other private sector deposit-takers."

"It seems likely that NS&I's index-linked products attracted much of the money deposited in this period," he said.

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Mortgage rates lowest in 23 years

27 June 2011 Last updated at 10:43 GMT Mortgage rates may be low but deposit requirements are still high and sales are subdued Interest rates on new mortgage deals have fallen to their lowest level in 23 years, according to the financial information service Moneyfacts.

It says this is due to lenders finding it cheaper to raise funds in the financial markets.

This has been due to the realisation that the Bank of England is unlikely to raise its bank rate above 0.5% soon.

However most mortgage deals still require buyers to put down at least a 20% deposit.

"Earlier this year the market expected a rise in bank base rate, that saw mortgage rates start to rise," said Michelle Slade of Moneyfacts.

"An imminent rise in bank base rate now appears unlikely, and the cost of funding on the swap rate market has reduced."

"Lenders appear to be applying cuts equally across all loan-to-value (LTV) tiers, which is good news for first-time buyers, as previously cuts were only being applied to the lower LTV bands," she added.

The swaps rate determines the cost of borrowing for banks and building societies when they want to borrow longer-term money in the financial markets at a fixed rate to lend onto their customers.

The market provides an indication of when banks expect the Bank of England to raise short-term interest rates.

Until recently, a rate rise had been expected as soon as September.

But following a set of weak economic data, as well as the decision by a new member of the Bank's rate-setting committee to vote for no change in rates, markets now do not expect a rate rise until well into next year.

According to Moneyfacts, the average two-year fixed rate deal is now at 4.32%, three year fixed deals now average 4.92%, five-year fixes are at 5.29% and the average two-year tracker deal is now at 3.37%.

Clare Francis at moneysupermarket.com said: "Interest rates will start rising at some point though, so anyone considering a variable rate deal needs to make sure they'll be able to afford higher monthly repayments."

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Mortgage market 'to remain flat'

20 June 2011 Last updated at 09:33 GMT The housing market has seen relatively little activity in recent months Lenders expect activity in the mortgage market to remain flat in the coming months, despite a rebound in May.

Gross mortgage lending in the UK totalled an estimated ?11.3bn in May, up 12% from the previous month, the Council of Mortgage Lenders (CML) said.

The figure was 1% higher than in May 2010, but the lenders' group said the market remained relatively subdued for house buyers.

The CML said it expected no significant upturn soon.

The figures come as the government unveils more details about its Firstbuy scheme.

The shared equity scheme aims to help 10,000 first-time buyers get on the property ladder if they buy newly-built homes.

Remortgaging

The CML's gross mortgage lending figures include loans for house purchases and remortgaging.

The total in May returned to the same level as it had been in March.

"Lending in May recovered after low activity levels in April," said CML director general Michael Coogan.

"Distorting effects from Easter and bank holidays cloud the current picture, but the likelihood seems to be for essentially flat levels of lending over the next couple of months."

However, he said that home loans for house purchases were lower than a year ago. The pick-up in remortgaging, seen in recent months, was also running out of steam as expectations of an interest rate rise this year receded.

Jonathan Samuels, chief executive of Dragonfly Property Finance, said: "Competition and appetite among lenders is returning but they are still very conservatively minded, as indeed are borrowers in the current anxious economic climate."

Pledge

Separately, details of the developers and lenders potentially to be involved in the government's Firstbuy scheme have been released.

Continue reading the main story Only available to first-time buyers purchasing a newly-built homeBuyer offers 5% deposit with additional equity loans provided by the housebuilder and the governmentFunding for the scheme will only be provided by the government for a yearThe project, announced in the Budget in March, will see loans offered to some first-time buyers purchasing a newly-built home.

Buyers must save a deposit worth 5% of their property's value, with the government and housebuilders putting up 10% each through an equity loan, enabling people to qualify for a 75% loan-to-value mortgage.

The equity loan would be interest-free for the first five years, with interest charged at 1.75% in year six, and at inflation plus 1% thereafter.

Housebuilders expected to take part include Persimmon Homes, Barratt Homes, Bovis Homes, CM Yuill Limited, Galliford Try Homes, Morris Homes Limited, Radian, and The Miller Group.

Lenders expected to take part include the Halifax, Nationwide Building Society, Barclays and the Melton Mowbray Building Society, according to the Department for Communities and Local Government.

The government's ?250m pledge, funded from a levy on the banks, will only last for one year. Of this, ?210m will be spent in England, with the rest spent in Wales, Scotland and Northern Ireland.

The scheme is less generous than the previous government's HomeBuy Direct scheme, which was considered a success by housebuilders.

The introduction of Firstbuy has not altered the CML's forecast for a relatively flat mortgage market.

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