Virgin has unveiled its Help to Buy home loans earlier than expected. We see how they stack up.
Mortgage lending declines by 4%
Mortgage lending was around 4 per cent lower in August than a year ago, figures show
Mortgage lending was around 4% lower in August than a year ago, despite the launch of an £80 billion scheme to boost the struggling economy, figures from lenders show.
Gross mortgage lending stood at an estimated £12.6 billion last month, representing a 1% decrease compared with July and a 4% fall from the £13.1 billion figure recorded in August 2011, the Council of Mortgage Lenders (CML) said.
However, the lending body said it expects buyer interest to be stimulated in the coming months by the Bank of England and the Treasury's £80 billion "funding for lending" scheme, which was fired into action at the beginning of last month.
It said a NewBuy scheme, which has already been running for around six months and enables buyers to purchase a new-build home with a fraction of the usual deposit, will also help to give buyers a boost.
CML chief economist Bob Pannell said: "We expect to see stronger take-up of NewBuy over the coming months, helped by a concerted marketing effort by builders and the recently-launched funding for lending scheme, which has prompted reductions in NewBuy mortgage rates. Both factors should stimulate buyer interest.
"The funding for lending scheme is a bold move that has the potential to greatly influence the course of the housing market over the next year or so.
"While not a panacea for all housing market problems, the scheme does offer the potential to improve the lending environment."
Mr Pannell said it would be "towards year-end" before any initial assessment of the impact of the scheme could be reached.
The funding for lending scheme aims to unclog the flow of credit by making money available to banks on the condition they pass it on to businesses and households in the form of cheaper loans and mortgages.
While mortgage lenders have recently slashed some of their rates, much of the competition so far has been around buyers with larger deposits and some lenders have also announced mortgage rate increases.