A Bank of England survey shows that building societies and banks are expected to lend more money to would-be homebuyers – and to businesses – over the next three months.
This is more encouraging news for the property sector which has shown distinct signs recently of beginning to perk up.
But there is still a sizeable downside to the more positive news. It is likely that lenders will be tightening – not easing – their lending criteria over the coming quarter. This, plus a dearth of competitive deals which are available to the majority of putative buyers is still acting as a brake on the property sector.
Homebuyers who cannot rake together a chunky 40 per cent deposit are still excluded from the most competitive mortgage deals – and people who can only muster 10 per cent of the purchase price or less will have to pay high rates of 6 per cent or more.
These factors, plus a shortage of properties coming to market for sale, are impeding the recovery of the property sector.
One of the UK’s major lenders, HSBC – the biggest bank in Europe – has said that it’s going to ease its criteria for lending from today.
Until now only buyers with a 40 per cent deposit would have been eligible for a competitive 2.95 per cent tracker deal. But from today it’s lowering the required deposit to 25 per cent.
This is clearly good news for property buyers – but it still rules out a huge swathe of first-time buyers who simply cannot raise a quarter of the asking price of a property.
A slight rise in property prices has been recently reported – and a surge in interest from would-be buyers.
In parts of London it is reported that boom conditions are beginning to reveal themselves with some agents talking about gazumping and interest from buyers being so intense in a number of isolated incidents that sealed bids are once again in evidence.
The most common complaint from estate agents remains, however, that competitive 10 per cent mortgages are virtually non-existent and there are too few properties to sell.
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