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Banks report housing market boost
Banks have predict an increase in first-time buyers will help improve housing market conditions further in the coming months
Banks have reported more signs of life returning to the housing market and predict that an increase in first-time buyers will help improve conditions further in the coming months.
Mortgage lending to home buyers saw an uplift in March following a seasonal winter slowdown, with 31,227 approvals worth £4.8 billion made, the British Bankers' Association (BBA) said.
Its report adds to evidence that Government efforts to boost lending are having an impact on the mortgage market - although the BBA said that households and firms are still generally reluctant to borrow money due to wider uncertainty about the tough economy.
The Government's Funding for Lending Scheme was launched last August to give banks access to cheap finance on the condition that they pass on the benefits to households and businesses.
Mortgage availability has increased sharply since then and lenders have slashed their rates. There have been signs that this is trickling down to help first-time buyers, which banks said should help to free up some stuck housing chains.
The Council of Mortgage Lenders (CML) has reported that first-time buyers have consistently accounted for around two-fifths of house purchase loans for the last six months.
BBA statistics director, David Dooks said: "The prospect of more first-time buyers entering the market during 2013 is likely to help mortgage chains in due course. However, economic uncertainty and subdued confidence continues to determine borrowing behaviour, with households and businesses reducing borrowing and building up deposits where possible."
The BBA said that amid the mood of caution, personal deposits rose by 5.8% over the year to March, as households tried to shore up their finances.
People put £7.6 billion worth of new spending on their credit cards, although they continued a long-running trend by paying back more than they spent, with £7.8 billion repaid.
Consumers' borrowing on loans and overdrafts - which are generally used to buy high-value household goods - remains "weak", the BBA said, with a net repayment of £512 million last month.
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