Large increase in mortgage availability boosts market May saw mortgage lending soar by 21% to £14.7bn, compared with April’s £12.2bn figure. Reporting on the highest monthly estimate for gross mortgage lending since 2008, the May figures are 17% higher than the same month last year, according to the Council of Mortgage Lenders (CML). Interestingly, first-time buyers were prominent in the market, taking out 19,400 loans worth £2.5bn. This group therefore represented 46% of all advances offered. The average earnings multiple for those borrowers was 3.25 times Bob Pannell, the Chief Economist of the CML commenting on this data said: “The imminent change of guard at the Bank of England takes place against a backdrop of a modestly improving UK economy, albeit one that appears to rest upon a pick-up in consumer spending and a recovering housing market. “Funding conditions, helped by the Funding for Lending Scheme, continue to look favourable and are supporting more competitive mortgage pricing and availability and a gradual resumption of lenders’ risk appetite. “While the direction of travel is clear and it fits well with the more positive housing surveys from RICS and others, our forward estimate does imply somewhat stronger house purchase activity than we had been expecting. This may reflect a degree of pent up sales following the extended spell of poor weather earlier this year.” It is estimated that there are now 11.3 million mortgages held in the UK, amounting to £1.2 trillion of loans. Both the Government’s ‘Funding for Lending Scheme’, which offers banks and other financial institutions cheap funds, provided they are passed on to borrowers, and the ‘Help to Buy’ initiative, that offers guarantees of up to 20% of a property’s value, have driven up the demand for, and availability of, mortgage finance and may well precipitate another housing boom in the UK.
Markets (June) (Data supplied by the Outsourced Marketing Department) Equity markets globally took fright in June at the US Federal Reserve Chairman, Ben Bernanke’s comments about their possible tapering off of the quantitative easing programme, provided the US economy responds positively. The FTSE100 at one point dipped by 5.5% over a four-day period in mid month, but with high volatility it recovered slightly to end the month on 6,215.5, down 5.58%. The FTSE250 followed suit declining by 3.85% to finish at 13,798.2 and the AIM market also losing 5.6% of its value at 689.01. In the Fed’s homeland, the Dow Jones was less volatile, ending June down just 1.36% at 14,909.6, with the junior Nasdaq off 1.52% to finish on 3,403.25. The European bourses followed this negative trend, seeing the Eurostoxx50 drop 6.03% at 2,602.51. Japanese sentiment was less bearish, but the Nikkei’s recent strength still faltered, dropping 0.71% and finishing the month on 13,677.32. With attention focusing on the equity and risk markets, the foreign exchanges had a quiet month with all the major currencies seeing virtually no change. Sterling remained at $1.52 to the greenback and at €1.17 against the Euro. The US$ similarly remained at $1.30 against the Euro. On the commodity front, gold continued its recent decline, also as a result of the Fed’s comments, dropping to $1,241.94 an ounce, a 10.54% dip over the month and just short of a 25% fall in the quarter. Market commentators consider the precious metal may even test the $1,150 next technical support level. Meanwhile black gold, oil, remained little changed with the benchmark Brent Crude price rising by 1.76% to $102.16 a barrel. Download full report here