“Today’s Bank of England figures show that, while the overall value of mortgage lending rose in February, the only modest increase in activity levels was seen in the remortgage arena. With house purchase approvals lagging behind January’s total, and below the six month average, it is clear that better rates alone will not be enough to boost house purchases in significantly larger numbers.
“Many lenders are understandably cautious about relaxing their borrowing criteria, which is one reason why the Funding for Lending Scheme is yet to have the scale of impact that was hoped. If it is implemented effectively, the new Help To Buy mortgage guarantee will encourage higher loan to value (LTV) lending, but there are eight long months before this comes into play and there are lots of operational details still to settle.
“Expanding the First Buy equity loan scheme to all new home buyers in the meantime will certainly help to boost the number of mortgage approvals. But with new build homes in short supply, we must hope that it also encourages house builders to increase output to meet the extra demand.”