Fool News: Mortgage Lending Unchanged
Lending across the housing market has remained buoyant despite growing concerns over affordability.
Lending across the housing market has remained buoyant despite growing concerns over affordability.Figures released by the Council of Mortgage Lenders have shown gross lending in August barely changed at £34 billion, compared to July's £34.1 billion. This has been largely fuelled by a growing buy-to-let market, which has helped to balance out a decline in lending for house purchases and remortgages. The latter two markets have fallen by 11% and 12% respectively since August 2006. This is in comparison to a 37% increase in other lending, where house price increases and increasing tenant demand have buoyed the buy-to-let market.However, debt servicing burdens are now at their highest for 16 years for first time buyers, a figure set to worsen over the coming months. The proportion of income first time buyers spent on interest rose from 19.7% in July to 20% in August, typically borrowing 3.38 times their income. It's worth noting that the figures published today cover the period before the problems at Northern Rock emerged, although they do reflect growing concern over interest rate rises. Michael Coogan, CML's director general addressed some of the implications of the Northern Rock predicament: "Mortgages are set to become more expensive for customers who have poorer credit histories....affordability clearly remains challenging but there may be some relief for borrowers with expectations of an interest rate cut, perhaps as early as November."More: How To Avoid First-Time Buyer Prison