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Mortgage Funds Rise as Prices Decline

The Bank of England revealed that lending has picked up in the last quarter of 2012 and it should continue into the months of 2013.
 
According to the Bank of England Credit Conditions Survey, it found that the Funding for Lending Scheme (FLS) had made significant improvements in making more funds available to lenders and borrowers. The ultimate aim of the scheme is to give lenders access to £60 billion in “cheap money” which is expected to be passed onto household borrowers and small businesses which should stimulate growth in the housing market. This has had the positive effect of increasing the number of completed sales by 6% compared to 2011.
 
This increase in lending may also have been helped by the average 1% fall in property prices across the UK. Nationwide reports that the average house price in the UK at the end of 2012 is now £162,262. As a result first time buyers may be more likely to get on the housing market as prices fall thus making the deposit requirement smaller which has been a major barrier for many.
 
However, for the market as a whole, this decline is unsettling as the 1% fall in 2012 counters the 1% rise seen in 2011. Nationwide does therefore suggest that the market remains fragile and may continue to be so into 2013. Moreover, the average decline of 1% does cover over the significant regional declines. While London prices rose by 0.7% throughout 2012, Northern Ireland experienced an 8.2% decline in house prices.
 
Property experts therefore have mixed feelings about the housing market in 2013. Nationwide predict slow activity in the housing market, while the CML and RICS believe there will be a reasonable increase.

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