House hunters will be happy to hear that mortgage lending competition is on the up. However, with high prices and a faltering economy, the market could crumble completely over the next 12 months.
HSBC has pledged to pump a substantial £15 billion into mortgages this year, including a £3 billion ring fenced mortgage for first time buyers.
First time buyers have had it tough over the last 12 months with both prices and deposits remaining high and affordability virtually non-existent.
This move by HSBC has pumped a bit more life into the mortgage market as the cash will be used by around 150,000 property owners and more than 27,000 first time buyers.
Who else is offering tempting mortgage deals?
Gross mortgage lending by the majority of major UK banks reached its highest monthly level for 2011 in December.
Figures from the British Bankersí Association (BBA) show that lending was 12% higher last month than in December 2010. The lending total hit a staggering £9 billion, which is good news for potential buyers as banks loosen the reigns on their lending restrictions.
There was also a small upturn in the number of house purchase approvals in the second half of 2011.
Duncan Kreeger, Chairman of West One Loans, said; “The mortgage market is staggering on, but it is battered and bruised. The protracted euro-zone crisis and glacially-slow economic growth has handcuffed the high street banks.î
ìThey are focusing on shrinking their assets to raise core capital, so appetite for growing their loan books has fallen almost completely off their radar. High loan-value mortgages are available, but almost no one can qualify for them.î
Despite this good news for both banks and buyers, it appears that households are still unable to save with the majority of people trying to pay off debts.
The BBA found that ìamid inflated household expenses and a continuing air of uncertainty, Brits are reluctant to take on mortgages, letting their net debts increase.î
A happy home?
Overall, mortgage lending activity has remained the same in 2011 as it has done over the past two years. The number of house purchase applications approved in 2011 were ëvery similarí to those in 2010.
The BBA has also found that remortgaging approvals increased over the last 12 months by 3%. As millions of UK homeowners are enjoying the low base rate, now could be a good time consider remortgaging your property.
Compare mortgages with Money Expert.
Whilst banks are offering mortgages on a platter, the Council of Mortgage Lenders (CML) believes that the UK mortgage market is heading towards uncertainty.
Lending figures, according to the CML, stood at £11.7 billion last month, down 12% on Novemberís figures. However, this shows a 12% increase on December 2010 figures.
However, this doesnít help the CML, who believe the next 12 months will be ìdifficult to call.î
The euro-zone crisis has created a wave of uncertainty across the mortgage market and whilst many UK buyers still want to own a property, they could find it tough to fulfil this ambition.
Despite the fact that total lending has increased by 3% to £140 billion compared with the 2010 mortgage lending figures.
Whatís next for the housing market?
Mortgage lending may have been on the rise last month, but thatís no reason to start picking out curtains. Experts warn that 2012 could be just as stagnant for the housing market as 2011 was.
Itís a possibility that prices could even fall further than they already have as some experts believe there could be price drops of up to 10%.
As UK economic activity slows down and government debt increases, the outlook could be worse than expected.
Official figures from the Office for National Statistics found that the economy grew by 0.9% over the last year, but fell by 0.2% in the last quarter.
This could have a dramatic impact on the housing market as banks may be keen to hold on to their cash with the economy crumbling around them.
As the housing market is still struggling to recover from the last recession, and the shrinking economy edges towards a new recession, homeownership will remain a distant dream for many people.
If you do not wish to wait for years to get on the property ladder, compare mortgages with Money Expert to find the best deal at the moment.