The number of UK homeowners remortgaging or having their properties repossessed has fallen, according to new figures. This is particularly good news for homeowners as the housing market shows positive improvement.
The Council of Mortgage Lenders (CML) found that the number of UK households remortgaging in June dramatically fell. There were just 23,400 remortgaging loans advanced in June, which is over 20% less than the previous month and the same time last year.
Whilst this is a positive sign for the housing market, the CML argue that homeowners might just be putting off remortgaging as borrowing rates could fall later in the summer. The number of remortgaging loans for June fell dramatically, by 25% compared to last year’s figures and 21% compared to the previous month.
First time buyers
The CML claims that first time buyer activity will also help up during the month. Mortgage advances to this group were amongst the highest levels seen since July 2010.
Many first time buyers are struggling to find their feet on the property ladder, with big deposit requests holding them back. Despite this, lenders may have eased up and are offering first time buyers lower deposits.
The stamp duty holiday, which ended in March, might have seen the number of first time buyers snapping up properties fall, but figures show that this is not the case.
The CML stated in a recent report: “First-time buyer activity, which had been affected in the spring by the stamp duty concession ending in March, held up in June.”
The number of potential homeowners buying property is steadily increasing. In June, 47,500 loans were given to this group which is a 2% increase on the figures for May.
The CML research shows that gross lending totalled £11.7 billion in June, which includes house purchases and remortgages. This figure was 7% down on the records for June 2011.
CML director general Paul Smee said:
“Lending figures have see-sawed in the first half of the year, and we may see more fluctuations in the coming months as the effects of the Olympics and other special events in the UK this year are reflected in our lending numbers. Within that broader context, first-time buyer activity is showing some signs of resilience as we move away from the obvious effects of the stamp duty concession, a trend that it would be good to see maintained.”
The double dip recession is in full swing and the Bank of England recently reduced their economic growth forecast to near zero for the rest of the year as thing look set to get worse.
As banks try to pinch the pennies further from consumer pockets they are increasingly offering more and more enticing deals. Recently, Tesco Bank launched a new mortgage for high cash customers and a price war has broken out amongst the major high street lenders to provide the cheapest fixed rate mortgage.
Households that are already struggling generally can’t afford to take advantage of these deals, leaving the economy in a fragile state.
Despite this economic doom and gloom, repossession levels have fallen and could continue to fall according to the mortgage experts.
New figures show that the number of homes being repossessed in the UK has fallen to the lowest level since the end of 2010.
The CML highlighted that there were just 8,500 repossessions in the second quarter of the year. This is down from the 9,600 figure seen in the first three months of the year.
The CML believes that the lower repossession levels can be attributed to the low interest rates and the help available for those unemployed mortgage borrowers, rather than homeowners dealing with debts.
“The figures show that lenders, borrowers and debt advisers are working together to get through the current period of economic difficulty and keep mortgage possessions in check,” Mr. Smee said.
The CML is still sticking to its prediction that over the course of the year lenders will seize around 45,000 homes in total (up 22% YoY) however.
The government’s Support for Mortgage Interest (SML) scheme is designed to help homeowners who are finding it hard to make repayments on their mortgage. The scheme covers the mortgage interest payments of those homeowners who are unemployed on up to £200,000 of their loan.
There is a 13 week waiting period for the scheme, however it will return to its original 39 week waiting period at the end of this year.
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