Property market to continue booming through 2014, says British Bankers Association

The boom in the British housing market will continue through 2014, according to a recent analysis of mortgage data undertaken by the British Bankersí Association (BBA).
The BBA, which is comprised of 98% of all the countryís mortgage lenders,  highlighted that the total level of mortgages distributed in its group had risen by 38% in the past year, whilst total mortgage approvals for home purchases is 57% higher than it was last year. 
It cited the governmentís flagship help to buy scheme as a primary factor behind the soaring activity in the property market at present, and praised the initiative for restoring consumer confidence and helping first time buyers climb onto the property ladder. 
“Mortgage borrowing continues to rise compared to a year earlier as mortgage assistance schemes help first-time buyers and housing chains more generally,” said the BBA statistics director, David Dooks.
“Approvals for new purchases have climbed quite significantly and are now at their highest point since September 2007.
“Credit card spending is also on the rise, showing that consumer confidence in the economy continues to improve,” he added.
The news followed house building giant Persimmons announcement earlier today that it expected its level of business to rise by almost £1.5 billion this year, almost £500,000 million more than it generated over the course of 2013.
At the same time, the company reported a 55% increase in its pre-tax profit revenue over 2013, whilst their total sales were up by 16% over the full course of last year, and an astonishing 30% in the second half. 
Persimmon reiterated the sentiment of the BBA, and praised the governmentís help to buy for improving its level of business, arguing that its positive data clearly displays that supply will be able to catch up with demand over the next few years. 
Mortgage lending reform expected
Despite the restoration of consumer confidence in the property market, and mortgage lending figures constantly on the rise, many finance experts have warned that it could potentially ëoverheatí later on down the line when interest rates are finally raised again.
Last week, the Bank of England dropped their biggest hint yet that they would implement a steady rise from spring next year, which will mean those who currently making their payments on a marginal basis will be far more financially burdened as the yearís progress from now. 
In particular, those who have interest-only mortgages are in danger of the worst ramifications of a rate rise, with consumers being encouraged to fix now in order to make an easier transition into the higher financial demands incurred by rates rises.
The Financial Conduct Authority has called on mortgage lenders to analyse their data and ascertain which borrowers on their books are in the most danger of defaulting on their mortgage repayments, so that they can formulate strategies to help them cope better in the future. 
New mortgage lending criteria has already been devised and is set for implementation from April this year, which will see people having their current and estimated future repayments tested against their current salary in order to acquire a mortgage. The borrower will have to be able to display that their income can stand up to both repayment rates in order to obtain their mortgage, in a move which is hoped will stop those who are ill equipped to deal with higher interest rates from taking out a secured loan.
Previously, research undertaken by Barclays suggested that even a small increase in interest rates could devastate the finances of low earning families in the country, with data highlighting that the bottom fifth of households in the country with a mortgage currently have to contribute over 50% of their monthly salary on repayments. 
And the FCA has promised to devise further new policy in order to help those who may fall in arrears on their mortgage payments in the future.
“Since we last looked at arrears management we have been pleased by the progress that firms have made,” said Clive Adamson of the FCA.
“We want firms to take further action to strengthen their arrears management practices and invest in their systems and people to make sure that they get this right.”
Reforms that have been considered are greater flexibility on the parts of lenders when dealing with customers in arrears, and higher levels of decision making power for all staff required presiding over collection, so that they are not dogmatically forced to take excessively harsh action against borrowers who have reneged on their original loan agreement. 

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