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| Small businesses fail to benefit from surge in lending | Small businesses fail to benefit from surge in lending |
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| Government schemes to inject credit into the economy have pushed mortgage lending to its highest level since the 2008 banking crisis but have failed to spark a revival in lending to cash-strapped small businesses. | Government schemes to inject credit into the economy have pushed mortgage lending to its highest level since the 2008 banking crisis but have failed to spark a revival in lending to cash-strapped small businesses. |
| The Council of Mortgage Lenders (CML) said the 26% rise in mortgage lending in June was a sign of a "meaningful recovery" in the housing market, while Savills said house prices were on course to hit their 2007 peaks over the next two years. The upmarket estate agent raised its forecast for rises this year from 0.5% to 3.5% and to 18.1% over the next five years. | The Council of Mortgage Lenders (CML) said the 26% rise in mortgage lending in June was a sign of a "meaningful recovery" in the housing market, while Savills said house prices were on course to hit their 2007 peaks over the next two years. The upmarket estate agent raised its forecast for rises this year from 0.5% to 3.5% and to 18.1% over the next five years. |
| However, there has been no positive impact on Britain's businesses. Amid concerns that the government's Funding for Lending and Help to Buy schemes are fuelling another housing bubble, businesses are repaying loans faster than lenders are granting new ones. Bank of England data showed £4.5bn of lending was sucked out of the business sector in the three months to May, a month when lending fell by £3.8bn alone. | However, there has been no positive impact on Britain's businesses. Amid concerns that the government's Funding for Lending and Help to Buy schemes are fuelling another housing bubble, businesses are repaying loans faster than lenders are granting new ones. Bank of England data showed £4.5bn of lending was sucked out of the business sector in the three months to May, a month when lending fell by £3.8bn alone. |
| "At best, it appears that the Funding for Lending scheme may have stopped lending to businesses from falling more than it has," said Howard Archer, chief UK and European economist at IHS Global Insight. | "At best, it appears that the Funding for Lending scheme may have stopped lending to businesses from falling more than it has," said Howard Archer, chief UK and European economist at IHS Global Insight. |
| The shadow business secretary, Chuka Umunna, described the figures as worrying, while Liberal Democrat peer Lord Oakeshott called the lending data for businesses diabolical. He said it was a wake-up call to the chancellor that Funding for Lending, which provides cheaper credit to lenders to pass on to borrowers, was not working for the business sector. | The shadow business secretary, Chuka Umunna, described the figures as worrying, while Liberal Democrat peer Lord Oakeshott called the lending data for businesses diabolical. He said it was a wake-up call to the chancellor that Funding for Lending, which provides cheaper credit to lenders to pass on to borrowers, was not working for the business sector. |
| The reverse is true for mortgage customers, as the CML said its members advanced £15bn of home loans during the month, the highest monthly figure since October 2008. | The reverse is true for mortgage customers, as the CML said its members advanced £15bn of home loans during the month, the highest monthly figure since October 2008. |
| These figures came at the end of a busy three months for banks and building societies, with lending buoyed by greater availability of high loan-to-value mortgages as well as the launch of the first part of the government's Help to Buy scheme, under which people buying new homes can get a five-year interest-free loan for up to 20% of the value of the property. | These figures came at the end of a busy three months for banks and building societies, with lending buoyed by greater availability of high loan-to-value mortgages as well as the launch of the first part of the government's Help to Buy scheme, under which people buying new homes can get a five-year interest-free loan for up to 20% of the value of the property. |
| The second part of Help to Buy is to be announced next week, when banks and building societies will be offered taxpayer-backed guarantees to encourage them to make mortgages available to borrowers with deposits of as little as 5% on new and existing homes. | The second part of Help to Buy is to be announced next week, when banks and building societies will be offered taxpayer-backed guarantees to encourage them to make mortgages available to borrowers with deposits of as little as 5% on new and existing homes. |
| Gross mortgage lending, which includes loans repaid as well as new ones granted, hit £42bn for the quarter, a 24% increase on the previous three months and the highest quarterly estimate since the final three months of 2008. | Gross mortgage lending, which includes loans repaid as well as new ones granted, hit £42bn for the quarter, a 24% increase on the previous three months and the highest quarterly estimate since the final three months of 2008. |
| Lenders had become more willing to offer loans to borrowers with small deposits, the CML said, with money filtering through to the mortgage market from the FLS, which was launched in August 2012. | Lenders had become more willing to offer loans to borrowers with small deposits, the CML said, with money filtering through to the mortgage market from the FLS, which was launched in August 2012. |
| The CML's chief economist, Bob Pannell, said: "Improvements in the cost and availability of mortgage credit are underpinning a meaningful recovery in the housing market. In recent months, we have seen the strongest performance for mortgage lending since 2008." | The CML's chief economist, Bob Pannell, said: "Improvements in the cost and availability of mortgage credit are underpinning a meaningful recovery in the housing market. In recent months, we have seen the strongest performance for mortgage lending since 2008." |
| The pickup in demand for properties has started to drive up house prices and the strong start to the year has led many commentators to revise their forecasts upwards. | The pickup in demand for properties has started to drive up house prices and the strong start to the year has led many commentators to revise their forecasts upwards. |
| At the start of year, Savills had been expecting prices to rise by 11.5% over the next five years by has now increased this to more than 18.1%. But Lucian Cook, director of residential research at Savills, said that transaction levels were still below pre-crunch levels. | At the start of year, Savills had been expecting prices to rise by 11.5% over the next five years by has now increased this to more than 18.1%. But Lucian Cook, director of residential research at Savills, said that transaction levels were still below pre-crunch levels. |
| "[Help to Buy's] launch into an improving market has triggered concerns that the government will provoke another bubble. But in our view these are stated given the conditions which attach to the scheme. Reassuringly, rising market activity has been due to increased turnover of existing debt rather than the creation of new debt that defined the late nineties/early noughties market". | "[Help to Buy's] launch into an improving market has triggered concerns that the government will provoke another bubble. But in our view these are stated given the conditions which attach to the scheme. Reassuringly, rising market activity has been due to increased turnover of existing debt rather than the creation of new debt that defined the late nineties/early noughties market". |
| The CML's Pannell noted that activity was below boom period level: "However, although the pace of first-time buyer activity is approaching a quarter of a million per annum, it is worth bearing in mind that this is still barely half of activity rates a decade earlier, and so far below what might be considered normal levels." | The CML's Pannell noted that activity was below boom period level: "However, although the pace of first-time buyer activity is approaching a quarter of a million per annum, it is worth bearing in mind that this is still barely half of activity rates a decade earlier, and so far below what might be considered normal levels." |
| Top mortgages | Top mortgages |
| HSBC | HSBC |
| HSBC | |
| HSBC | HSBC |
| Provided by London & Country for the Guardian | Provided by London & Country for the Guardian |