New research from the Bank of England indicates that approvals for residential mortgages have fallen in the 3 months to August when compared to the three month period before. This appears in contrast to the figures produced on the availability of secured lending to households which appears to indicate a significant increase in the 3 months to September. The economic conditions in the wholesale funding markets deemed longer term funding markets has improved during quarter three of 2012 however the availability of finance across businesses of all sizes remained the same, the Bank has said.
This is not fully supported by official data covering lending figures issued by all UK-resident banks and building societies which has confirmed that business lending has actually fallen by over £2bn over the three month period. There have been some encouragement that rates are starting to fall, which may increase demand, but lenders need to retain their focus to ensure the products are made available to those that need it, particularly first time buyers, small to medium sized businesses and those deemed mortgage prisoners.
It is clear that neither of these groups enjoy accessibility to the best mortgage deals being made available and there remains concern that only a limited number of people remain able to satisfy the stringent lending criteria, presently in operation. It is important that lenders start to divert the cheap funding brought in through the Government’s Funding for Lending programme and use these funds for the purpose they were granted, to assist those at the lower end of the market.
In the vent, the current trend continues, many commentators believe we are highly unlikely to see a significant recovery in the volume of first time buyers or a general housing market recovery as these seldom occur from the bottom up. There also needs to be assistance to ease the pressure on the private rented sector which is experiencing increased inflationary pressures.
The Bank of England's network of agents report that credit is available to large firms, particularly those with a strong balance sheet but recognise that smaller businesses continue to struggle to obtain credit.