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UK mortgage market to remain tough in 2011

Thursday, 21 April 2011 2:37 PM

Substantial growth in lending may not return to the UK mortgage market until 2014 following marginal increases this year.

According to Datamonitor, "it will remain tough for UK consumers to get a mortgage in 2011".

The analyst predicted that subdued activity in the housing market will effectively cause a 'rationing' of mortgage funding over the coming months.

However, the predictions – which were made yesterday – were seemingly contradicted by figures from the Council of Mortgage Lenders (CML) published the same day.

Chief economist for the CML Bob Pannell said the organisation's statistics showed the housing market "has emerged hesitantly from hibernation".

In March alone, 21 per cent more mortgage funding was approved by lenders than in the previous month.

That represented a year-on-year decline of just two per cent, while lending for the first quarter of 2011 was actually up by one per cent compared with 2010.

Pannell went on to say that remortgaging activity was particularly strong over the course of March, as the Bank of England continued to hold the base rate at 0.5 per cent.

As more fears about a rate rise impacting on mortgage repayments begin to emerge, the demand from people switching to fixed-rate products could grow in the months to come.

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