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Mortgage market 'to remain flat' lenders say | Mortgage market 'to remain flat' lenders say |
(40 minutes later) | |
Lenders expect activity in the mortgage market to remain flat in the coming months, despite a rebound in May. | 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. | 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 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 CML said it expected no significant upturn soon. |
The figures come as the government unveils more details about its Firstbuy scheme. | 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. | The shared equity scheme aims to help 10,000 first-time buyers get on the property ladder. |
Remortgaging | Remortgaging |
The CML's gross mortgage lending figures include loans for house purchases and 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. | 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. | "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." | "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. | 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." | 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 | Pledge |
Separately, details of the developers and lenders potentially to be involved in the government's Firstbuy scheme have been released. | Separately, details of the developers and lenders potentially to be involved in the government's Firstbuy scheme have been released. |
The project, announced in the Budget in March, will see lower-cost loans offered to first-time buyers purchasing a newly-built home. | The project, announced in the Budget in March, will see lower-cost loans offered to 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. | 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. | 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. | 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. | 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 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 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. | The introduction of Firstbuy has not altered the CML's forecast for a relatively flat mortgage market. |
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