Mortgage lending has peaked, says Barclays mortgages

Citation

(1998), "Mortgage lending has peaked, says Barclays mortgages", Property Management, Vol. 16 No. 1. https://doi.org/10.1108/pm.1998.11316aab.002

Mortgage lending has peaked, says Barclays mortgages

Mortgage lending has peaked, says Barclays mortgages

Year on year growth in mortgage lending rose by 8 per cent from August 1996 to August 1997 according to Barclays Mortgage Index (see Figure 1 and Tables I and II) which measures the activity of all mortgage lenders. This suggests that the record levels of activity seen in July will not be sustained and that the market should now be entering a more stable period.

Barclays Mortgage Index is a monthly measure of gross new mortgage advances and is designed to provide an early indication of trends in the mortgage market. The Index is based on the flow of funds through solicitors' deposit accounts, of which Barclays has a market share of approximately 30 per cent. Most of these funds are for mortgage advances and are drawn from the full range of mortgage lenders, not just Barclays.

Although total lending rose 8 per cent from the previous year, it fell by 7 per cent from July's level. This fall is probably due, in part, to the recent increases in interest rates.

Confidence in housing prices has remained stable over the last few months according to Barclays Mortgages Consumer Confidence Research. This month just over half (53 per cent) of existing and potential homeowners expect the value of their home to increase in the next 12 months compared to 54 per cent in the three previous months. The continued stability in the number of people who expect their house value to rise suggests that there is a growing acceptance that house price inflation is not the most important consideration when buying a home.

This September slightly fewer people say they are planning to sell their home in the next 12 months (one in 14 compared to the previous three months' figure of one in 12). However, more people are looking to buy a home. Over the last three months Barclays research shows that one person in seven is thinking of buying a house in the next 12 months ­ this figure rose to one in six in August.

This suggests that more people are looking at every home on the market. Therefore, potential buyers may face stiffer competition from other possible purchasers when looking to buy a new home and this emphasises the need for a fast and efficient service from a quality lender.

Commenting on the latest figures, Barclays Mortgages marketing director, Jim Chadwick, said:

"The stability coming through in the market is generally good news for home-buyers. Nobody wants to see a return to the market conditions experienced at the end of the 1980s.

"It would appear that the recent increases in interest rates are having an effect on the market and limiting demand for property.

There is evidence to suggest that people are thinking more carefully about buying a property and treating it as a home rather than an investment. With possible fluctuations in interest rates people want some reassurance that their mortgage payments will not increase for the next few years. With this in mind, it is not surprising that fixed rates are still so popular."