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UK leading the way in the mortgage market

1st June 2006 | back to article listings BACK    print this article PRINT

A third of all gross advances in the European Union residential mortgage market took place in the UK last year.

A new report from Datamonitor has confirmed that the UK is very much the dominant force when it comes to mortgage lending, with gross advances reaching a staggering £286,528 million in the year.

This compares to second place France where gross advances reached only £93,000 million.

It is thought that the UK's strong performance can be largely attributed to exceptional house price growth as well as the consistently high demand for property. On the other hand, it does seem that residential mortgage lending was buoyant throughout the European Union, with a 13.6 per cent rise on the previous year.

While the UK had the biggest share of mortgage lending, Finland enjoyed the quickest increase in advances, with a 32.3 per cent rise. Ireland and Belgium followed closely behind with increases of 28 per cent and 27.2 per cent respectively.

With the economy still entering a process of rejuvenation, the mortgage market in Germany actually fluctuated hugely in 2005 and it remains one of the few countries not to have seen a surge in the trend of remortgaging.

Datamonitor actually found that 41 per cent of all European mortgages taken out in 2005 were remortgages.

The report also stresses once again the appeal of property investment in Spain, with house prices in the country rising by 17.1 per cent between 2001 and 2005.

Growth of 13.2 per cent in the UK during the same period is still seen as impressive, as is a figure of 10.8 per cent for France.

In addition to the Datamonitor report, the Bank of England has released its own figures on mortgage approvals in the UK. In April, mortgage approvals for home purchases reached a total of 106,000, which was down from the 114,000 in March.

While this is up by 12.8 per cent on last year, it still represents a seven-month low, although the Royal Institution of Chartered Surveyors (Rics) points out that it is still higher than the historical average of 97,000.

Rics claims that a "modest slowdown" in the housing market is in reality unsurprising, with estate agents already noting that enquiries from would-be buyers increased at the slowest pace in almost a year during April.

While the new statistics suggest that house price growth may be moderately stunted in the coming months Rics points out that the economy is set to grow at a decent pace, which should keep demand for property high.

The market is also being boosted by the growing popularity of property investment, with investors in the buy-to-let sector beginning to form a solid foundation for growth.

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