The CML believes that the UK’s net mortgage lending could fall below the forecasted figure of 15 billion pounds in 2010.
The Bank of England recently released figures for April which showed that net mortgage lending only rose by 490 million pounds as opposed to the 700 million previously forecasted. A total of 49,871 loans, including mortgages for contractors, were approved during the month, a rise of 863 on March. Whilst that was the highest number since last December, it was still below the six-month average of 53,098.
94% of all the UKs residential mortgage lenders are members of the CML and this year they have been experiencing a slowdown in the housing market which could be in some way attributable to the expiry at the end of last year of a tax-break on lower-valued properties. The CML intends to update its annual forecast later this summer.
A range of new mortgage products have been appearing on the market. Amongst them are complex prime mortgages from Investec’s Kensington division and General Electric’s GE Money unit. These products bear a striking resemblance to the sub-prime mortgages that sparked the financial crisis in the U.S. three years ago.
The 2 companies are now offering loans to customers who have been refused by the mainstream lenders but they say the mortgages are for less money and are going to customers who have better credit histories.
The marketing director for GE Money’s UK mortgage arm, Gerry Bell, said that their customers had clear credit records although they may have suffered minor blips. They will lend to borrowers who have defaulted on loans twice and have one CCJ against them.
Kensington launched Prime One in March which lends up to 89% of a property’s value to borrowers who have up to 2 CCJs totalling no more than $1,080.
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