Mortgage lending has been on a constant climb throughout 2010, but analysts are worried that 2011 will not see the same positivity.
According to the latest Bank of England data, November saw mortgage lending increase by £0.8bn, £0.1bn higher than the previous six-month average.
Despite this, November’s rise fell short by £0.4bn in comparison to October’s £1.2bn increase.
Chief economist for IHS Global Insight, Howard Archer said “While the Bank of England data shows that mortgage approvals edged up in November, they remained at a very weak level and the modest increase does little to dilute the belief that house prices will remain under downward pressure in the early months of 2011 at least.
What it does suggest is that house prices are more likely to trend modestly downward rather than crash.”
Despite a steady increase in loan approvals for house purchase, it is clear that there is an 18.6% drop since the November 2009 peak of 59,019. 2010′s high of 48,019 is however substantially lower than the 70,000 – 80,000 level that has been consistence since 1993.
Despite disappointing those who already own their own homes, in particular recent owners who have little equity in their property the news is not all bad. Many prospective first-time buyers who have struggled to find a home they could afford are more likely to now find a sufficient lender.
Housing minister Grant Shapps has revealed his hopes for a small and gradual real-time fall in house prices in order to make the buying process less difficult for new buyers.
He added “the time has come for property to be seen as something to live in and not an investment.”