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Mortgage spending on the up

1st July 2005 | back to article listings BACK    print this article PRINT

With house prices beginning to flatten and the UK property market showing new signs of stability, confidence among buyers is definitely returning, and increased activity is set to take place over the remainder of the year and into 2006. Following the uncertainty of months previous, especially before the General Election in May, many prospective buyers are making new efforts to invest in properties, with asking prices falling closer in line to the amounts they are prepared to pay.

Statistics from the Bank of England are supporting this view. According to the Bank, there was a significant increase in the number of mortgage applications made during May, a trend that could be set to continue in the future. More and more people are deciding to commit to mortgages, capitalising on current market stability. Moreover, it was found that fewer borrowers are remortgaging despite the fact that overall mortgage lending grew faster than the six-month average.

"The Bank of England figures point to a stabilisation in the market following a modest recovery in activity since the lows of last winter," commented Milan Khatri, Royal Institute of Chartered Surveyors economist.

"The number of mortgage approvals have been steadily picking up since last November's low of 77,000. The number of approvals have steadied at around their long-run average of 95,000 per month, though are still down 21 per cent from year ago levels and 28 per cent below the peak reached in December 2003."

Nonetheless, warnings have surfaced that a full boom in the housing market could be overly reliant upon interest rate cuts in the future.

According to figures released by the Office for National Statistics mortgage holders are paying, one average, over £2,600 more per year than those who rent their properties. It was calculated that across the country, the average net rent paid sits at £46 per week as opposed to £97 for mortgages.

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