Wednesday, 9 May 2012

Mortgage Lending hits 38 year low!

Lending for house purchase last year was the lowest for 38 years, the Council of Mortgage Lenders has reported.

It has also criticised the Government for ‘less helpful’ policies towards the housing and mortgage markets, which it says will increase repossessions.

Martijn van der Jeijden, chairman of the CML, says in his introduction to the CML’s annual report for 2011, that cuts in State support for borrowers in difficulty will put ‘upward pressure on mortgage arrears and repossessions in 2012 and beyond’.

He also criticised the Government’s ‘insistence that its welfare reforms should entail paying housing benefit to tenants rather than landlords’, saying that this would discourage lenders.

Van der Jeijden, who describes last year as ‘challenging’ for the UK economy, borrowers and lenders, is also critical of the FSA’s proposed reforms. He says: “It is clear that we still have a great deal to do to help deliver the right kind of regulatory reform which does not unnecessarily constrain the mortgage market.”

The report shows that there were 508,000 house purchase loans last year, down from 538,000 in 2010 – and the lowest annual total since 1974. Lending to first-time buyers slipped by 2% last year, compared with 2010.

Altogether, says the CML, there were 870,000 properties purchased last year, including cash purchases and buy-to-let.

Buy-to-let lending was the only sector that grew, expanding by 40% – with £14.1bn advanced, up from £10.01bn the year before. Even so, it remains subdued, and far down on the £45bn buy-to-let loans in 2007. Altogether, there were 124,000 buy-to-let loans last year, a 32% increase in number on 2010.

Remortgaging also grew, up by 18% to reach £46.7bn.

The CML’s annual report also criticises the European Commission for trying to impose its directive on credit agreements relating to residential property on the UK market.

It calls the Commission fundamentally misguided in its attempts to create a single mortgage market in Europe. Under the directive, buy-to-let mortgages would be treated like ordinary residential mortgages and assessed on the borrower’s income, but not on rents. The CML wants buy-to-let lending to remain outside the scope of regulation for the home-ownership market.

Rightmove post strong start to 2012

Rightmove this morning announced a bullish performance to its shareholders after hiking its prices to agents.

It said that the business continues to trade in line ‘with the strong start to 2012’, with Rightmove traffic setting new records and up 20% on the same time last year.

The interim management statement, covering January 1 to May 9, said that average revenue per advertiser ‘has grown strongly as a result of sales of additional advertising products and price increases’.

It reported that over 75% of agents are now taking at least one additional product and that over 30% of their spend in April was on additional advertising products.

The statement added that Rightmove’s operating costs remain low.

It concluded: “Subject to their being no significant decline in the UK housing market, the Board remains confident of meeting its expectations.”

In February, Rightmove reported its results for last year, highlighting a profit margin of just over 71%. It will be paying a dividend to shareholders for 2011 next month, on June 8.

Last week, its shares hit a 52-week high of 1,600p after analysts upgraded the property portal in advance of today’s trading update. The analysts said Rightmove’s returns to shareholders remained ‘very high’, with no signs of cost pressure.

Panmure Gordon hiked its target price to 1,780p, whilst Alex DeGroote said Rightmove is proving itself capable of delivering good earnings per share without any growth in volume or clients.

However, the shares quickly retreated from their peak and stood at 1,470 at yesterday’s close.