The British Bankers’ Association has released its mortgage lending figures for December and they show that home loan approvals hit a 19-month high.

36,171 mortgages were approved in the final month of 2011, up from 34,809 the previous month. The figures would suggest that slightly more first time buyers entered the market place as the number of remortgages declined marginally in December.

Despite the upturn towards the end of the year, contractor mortgage approvals are still well down on the boom days and this was reflected in the number of completions last year. Only 890,000 house sales were completed, the lowest since 2009 and one of the lowest totals since records started to be kept in 1978.

Rising unemployment and a lack of available credit are to blame for the low housing market activity, according to many experts. People moving home and first time buyers have struggled to get credit and therefore we must expect low sales levels, Geoff Meen, an economics professor at the University of Reading explained.

The CML has already said it expects this year to be similar to last and suggests that there could be even fewer sales this year. The Building Society Association’s Adrian Coles shares that sentiment saying he does not expect to see pre-recession level sales in the near future. He explained that we have seen some fundamental changes that will prevent the market recovering in the next couple of years.

The FSA intends to ban mortgages that are higher than the value of the property next year. Many people think that lending more than a home was worth was a major contributory factor to the most recent recession.

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Contractor mortgage hunters who are concerned that interest rates may rise dramatically in the next couple of years may want to consider taking out a ten-year fixed rate product.

The Norwich and Peterborough Building Society announced last week that is was launching a 75% LTV mortgage fixed at 3.99% for ten years. The fee for this product is a modest £295 and includes free legal fees and valuation.

Home buyers in the UK have been reluctant to commit to a long-term mortgage because of hefty early repayment charges, but David Black from Defaqto, the financial statisticians, said that they are worth considering for people who know they are going to remain in a property for a long time.

There are not a lot of long-term fixes on the market at the moment and the Norwich and Peterborough offering has the best rate, as well as low arrangement fees.

Recent research from Moneyfacts found that fees on home loans have been rising dramatically in recent months. This time last year, purchasers paid an average arrangement fee of £899, now the figure is £1,498.

Moneyfacts.co.uk spokesperson, Sylvia Waycot, said that people tend to ignore the cost of arrangement fees in the overall excitement of purchasing a home. But this could prove a costly, particularly if the cost of the fee is added on to mortgage. Consumers should always take incentives and charges into account, as well as the headline rate, when shopping around for the best deal.

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Recent research suggests that 20% of first time buyers were unable to find a suitable contractor mortgage in 2011.

The study from the UK Mortgage Council also discovered that more than one in four prospective first time buyers would only have enough money for a 5% deposit, while 28% believed they had enough savings for a 10% deposit.

CML data released towards the end of last year showed that first time buyer deposits averaged 20%.

RFi analyst Anna Spivack said that low deposit products are available from some building societies that offer 95% LTV mortgages to first time buyers. However, although there are products available, first time buyers without a large deposit are faced with a more challenging environment than those who bought in previous years simply because of the current turbulent economic climate.

The UKMC study found that 29% of first timers wanted a home loan of between £100,001 and £150,000, whilst slightly more than one in five wanted a mortgage between £50,001 and £100,000. Less than 5% had set their sights on a mortgage of between £250,001 and £300,000.

Spivack went on to say that these figures are reasonable considering current UK house prices, but they do explain why the majority of first time buyers expect to get a mortgage of at least 90% LTV. Nearly 60% of prospective first purchasers earn a maximum of £30,000 a year and trying to save £35,000 as a 20% deposit for a £175,000 home would be impossible for many of them.

How indicative the UKMC’s figures are on the real state of the first time buyer market in the UK could be in doubt as the group only surveyed 333 prospective property owners.

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There hasn’t been much good news to shout about in the housing market recently, but a glimmer of hope has crept in after the CML announced that mortgage lending increased in November.

The number of people taking out a fixed rate contractor mortgage in November was the highest seen for more than two years. 65% of the 47,000 mortgages taken out were fixed rate deals as borrowers took advantage of the good deals available. The Post Office and Nationwide are amongst the providers to have slashed the rates on their fixes as the Bank of England base rate remains at 0.5%.

Despite November’s increase, Howard Archer from HIS Global Insight explained that the UK’s housing market is still low and will probably come under further pressure this year. He expects house prices to fall by as much as 5% as the market is weighed down by rising unemployment, weakened economic activity and low consumer confidence.

First time buyers took out 17,300 mortgages worth a total of £2.1 billion in November. In November 2010, the typical first timer spent 13% of their income on mortgage interest payments. By November 2011, this had decreased to 12.2%.

The CML remarked that although we have seen a significant decrease in the number of first time buyers since the start of the recession, the proportion of mortgages granted to them has stayed reasonably steady. Last November, 37% of all mortgages went to first timers. There was also a 2% year on year increase in the number of mortgages granted to people moving home.

Paul Smee, the director general of the CML, expects to see first time buyer activity increase in the short term as purchasers rush to complete before the stamp duty holiday ends in March.

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People looking for a contractor mortgage may want to consider visiting HSBC after the bank announced it planned to make a minimum of £15 billion available to UK homeowners this year. £3 billion of this pot will be set aside specifically for first time buyers.

According to the CML, the UK mortgage market will shrink this year and HSBC’s commitment will give it a market share in excess of 11%. HSBC lent £6.7 billion in residential home loans in the first half of last year, an increase of 35% on the comparable period in 2010.

The majority of the £15 billion will be new funding coming into the mortgage market and will make HSBC the fifth largest mortgage lending institution in the UK. Around 150,000 homeowners, and more than 27,000 first time buyers will be able to get a mortgage from the bank this year.

HSBC’s head of lending, Martijn van der Heijden, explained that HSBC offered highly competitive mortgage rates last year and it intends to do more of the same in 2012. HSBC does not intend to close its doors to new customers, but it will continue to be a responsible lender.

He went on to say the £15 billion demonstrates the bank’s commitment to help people moving home and those looking to get a foot on the housing ladder.

HSBC refuses to work with brokers, preferring to deal with all mortgage customers direct. Despite this, David Hollingworth from London & Country applauded the bank for consistently stating its commitments publicly.

Other lenders will no doubt be watching HSBC’s strategy closely and this latest announcement could lead to similar announcements from other lending institutions.

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Although the Bank of England has held the base rate at a historic low of 0.5% for almost three years, contractor mortgage rates have been increasing recently as lenders fear a double dip recession.

A lack of trust in the Eurozone banking sector led to lenders increasing the cost of short-term fixes and tracker mortgages last month.

However, there are still some good deals available for buyers who shop around. First time buyers may be interested in the 95% LTV two-year fixed rate mortgage from the Newcastle Building Society. There is a £995 fee to pay, but you can get a fee-free version, with free valuation, at 6.25%.

People looking to remortgage might want to look into HSBC’s lifetime tracker mortgage. It’s pegged at 1.99% above the base rate and available to people with at least 35% deposit. There are no arrangement fees or early repayment charges and the mortgage comes with free legal work and valuation.

Home buyers looking for a little more security could be interested in a two-year fixed rate mortgage from the Hanley Economic Building Society. You need at least 15% deposit and an arrangement fee of £495 to get an interest rate of 3.34%. The Hanley also has an 85% LTV five-year fix at 4.40%. There is no arrangement fee to pay and remortgagers get a free valuation and free legal work while new purchasers receive £250 cashback.

First Direct has a two-year tracker at 1.49% above base for people with 35% deposit. It does attract a £1,499 fee but there is no charge for early repayments.

However, before you jump in and grab one of these products, do the maths and take into consideration all the fees and freebies to make sure you really are getting the best deal.

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According to a new study, first time buyers in Scotland pay a lower proportion of their earnings towards their contractor mortgage repayments than people in other parts of the UK.

In the final quarter of 2011, Scottish borrowers spent an average 20% of their income on their mortgage payments compared to 27% in the rest of the UK. Over the past 27 years, the average mortgage payment for first timers and those moving home was 30% of income.

The research from the Bank of Scotland showed that East Ayrshire was the most affordable UK local authority. A typical mortgage in the area would cost the buyer 15.7% of local average earnings. North Ayrshire and West Dunbartonshire followed close behind with 16.2%.

At the other end of the scale, a typical buyer in Edinburgh forks out an average 26.2% of local earnings on his or her mortgage payment.

However, Dr John Boyle from Rettie & Co said the housing market north of the border was still suffering. Affordability has been boosted by falling house prices and lower mortgage rates but high deposits and stricter mortgage lending criteria have made it harder for first time buyers to get a foot on the housing ladder.

Bank of Scotland housing economist, Nitesh Patel, explained that mortgage payments for new borrowers in Scotland now take up the lowest proportion of earnings for almost ten years. If, as is widely expected, the Bank of England keeps the base rate at its historic low throughout 2012, affordability should remain favourable this year.

Mortgage payments across the UK have nearly halved since 2007 when they accounted for 48% of income. Buyers in Greater London however still spend 35% of their income on their mortgage and those in the South East spend 33%.

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Confidence in the British housing market is the lowest it has been for over a year as fewer contractor mortgage holders expect to see house prices increase in the next few months.

The most recent Housing Market Sentiment Survey from Zoopla.co.uk shows that only 55% of homeowners think that residential property prices will increase in their local area in the next six months. Three months ago, the figure was 59%.

Those who do expect property prices to rise during the first six months of 2012 predict the rise will be just 2.2%.

Homeowners still believe their property is a cut above the rest and will outperform the average. Despite predicting an average 2.2% increase for other homes in their locale, they expect their own home to increase in value by 2.8%. 29% of the survey’s respondents expect local house prices to fall but when it comes to their own property, only 24% expressed that sentiment.

Homeowners in the capital continue to buck the trend with 72% of residential property holders expecting to see house prices rise in the first half of 2012. Owners in London have predicted that house prices will increase by 4.7% in the first six months of this year.

48% of those surveyed said they will only believe the property market is improving when it becomes easier to obtain a mortgage, whilst just 11% of those surveyed believe mortgage availability has improved in the last three months.

Nicholas Leeming from Zoopla.co.uk said homeowner confidence has been battered by the general economic uncertainty. We are unlikely to see confidence return to the housing market until the economic outlook improves.

However, the housing market in London continues to be detached from the rest of the country. Overseas investors are still buying properties in the capital and this has led to increased prices and confidence levels for Londoners.

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According to ARLA, an increasing number of householders are putting their homes up for rent because they are unable to sell them.

During the third quarter of last year, 47% of the surveyed ARLA member agents reported an increased number of unplanned lettings as homeowners turned to the private rental sector. At the beginning of 2011 the figure was 40%.

In the North East and North West, more than 60% of agents reported that more people were entering the rental sector because they were unable to sell their property. The same was true in Northern Ireland, Scotland and Wales. At the other end of the scale, only 17% of agents in London reported an increase in reluctant landlords.

Tim Hyatt, the president of ARLA, said letting a home might be a good way to generate a consistent income if prospective landlords adopt the right approach. But he warned that there are potential pitfalls for both side as the letting industry is unregulated.

Strict mortgage lending requirements, falling house prices and economic turmoil in the Eurozone have meant that people moving home for business purposes have been struggling to sell their property, and renting it out could be the only way they can afford to relocate. Reluctant landlords are most likely to bring detached and semi-detached houses onto the rental market, according to ARLA.

However, prospective landlords should contact their contractor mortgage provider and insurer before they rent out their property because the terms of their contract might need to be amended.

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According to the Royal Institution of Chartered Surveyors, house sellers are becoming greedy and asking unrealistic prices.

The RICS said that the number of new instructions increased for the third consecutive month in December. The biggest increase in supply came from London, where new instructions rose to the highest level in nearly seven years. However, despite the number of new inquiries from buyers increasing slightly, expectations for future sales are flat due to unrealistic pricing from some vendors.

The latest RICS survey shows that house prices continued their downward trend albeit at a slower rate than in previous months. The only area to experience a rise in prices was London, whilst Humberside and Yorkshire and the West Midlands suffered the largest falls. 21% of the surveyors questioned expect house prices to fall further in the next three months.

Ian Perry, an RICS housing spokesman, said a lack of supply had been a major problem in some areas of the UK so it was pleasing to see more sellers entering the housing market in December. However, sellers must set a realistic price if they have any hope of selling their property within a reasonable timeframe.

The continuing turmoil in the Eurozone is likely to deter prospective buyers over the coming months and strict contractor mortgage lending criteria will prevent many prospective first time buyers obtaining the home loan they need.

Despite the economic gloom that heralded the end of 2011, sales activity managed to hold up reasonably well with average completions of 15.2 per surveyor for the final quarter of the year.

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Contractor mortgage seekers will be aware that house prices throughout the world have been affected by the global economic crisis but while people in the UK may think they’re suffering badly, things are even worse in countries like Ireland and Spain.

The world’s major housing markets registered a 1.5% rise overall in the third quarter of 2011. That’s the weakest increase since Q2 2009 and experts are now concerned that the next Global House Price Index from Knight Frank will reveal negative results.

Ireland saw house prices drop by more than 14% year-on-year in Q3 last year. Prices in Cyprus dropped by 6.6% and the decrease in Spain was 5.5%.

At the other end of the scale, house prices in Hong Kong increased by almost 20% annually. The Estonian housing market rose by 14%, while France saw prices rise by 6.7%.

Ireland is now propping up the bottom of the Global House Price Index league table with -14.3%, followed by Russia at -10.7% and Ukraine at -8.4%. At the top, Hong Kong and Estonia are followed by India, where prices rose by 13.9%, Taiwan by 12.7% and Slovenia with an annual house price increase of 9.0%. The UK comes in at number 30 with a decrease of -0.5%.

Between 2004 and 2007, housing markets around the world were recording double-digit annual growth. Those times are long gone. This latest index reflects prices in the third quarter of last year, before the Eurozone crisis peaked. The fourth quarter index will reflect the full impact the crisis in Europe has had on global house prices. It may not make pretty reading!

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Whilst first time buyers looking for a contractor mortgage have not yet fared quite as badly as the Dodo, in some parts of the UK they are increasingly becoming an endangered species.

According to a recent report, the East Midlands is one of the worst regions for first time buyers hoping to buy a home. Prospects for the next 12 months do not look good and the average UK earner would need to save for more than ten years to have enough money for a deposit. In the East Midlands, the average is 15 years.

A survey by InvestorBee discovered that a lot of first time buyers in the East Midlands don’t seem to grasp the reality of the situation. 27% of those who are saving for a deposit hope to buy a property this year, and 29% expect to be in their own home within two years. None of the survey’s respondents said they would save for longer than ten years in order to secure a deposit.

The average salary of a first time buyer in the East Midlands is £23,431. Even if they saved 9.3% of their income, it would take 15.6 years to save enough for a 20% deposit. House prices in the region currently average £169,411.

December’s first time buyer forecast from Rightmove suggested that only 18.4% of purchasers in the East Midlands this year will be first timers. The national average is 23% and puts the East Midlands in second last place. The South West has the lowest percentage of prospective first time buyers.

Rightmove’s survey also discovered that the average age for a first time buyer in England and Wales this year will be 32.

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