Gov't policies should lead to a better mortgage market

New policies likely to come into effect soon from the government could see the mortgage market in the UK increase, as lenders are given more incentive to approve mortgages for people to buy properties for sale and help to boost the UK property market as a result.

Ray Boulger, senior technical manager at John Charcol, said  that the changes may now make it the case that gross mortgage lending returns to better times and sits at a similar level to the £141 billion which was loaned to homebuyers in the UK last year.

This is important to the future of the market, as it was reported by the BBA recently that the number of housing loans approved in May of this year were a full 3.4 per cent lower than they were just 12 months ago.

Mr Boulger said that new policies in lending were about getting more money into the mortgage market to allow banks to hand it down to applicants, rather than widening the scope of people who may not be credit-worthy enough to get a mortgage at the current time.

"This is not about allowing people who are not credit worthy to get mortgages; at the moment we are in a situation where quite a lot of people who are credit worthy are not able to get a mortgage simply because there is not enough money available.

"As things stand at the moment, all the signs now are that we are going to see gross lending this year holding up well and being at a similar level to last year, as opposed to the expectation which most people in the industry."

Mortgages at the current time are often seen as far too expensive for many people to afford, with some companies looking for a 20 to  25 per cent deposit to help with the lending of a mortgage to those looking to get onto the ladder.

The government has already addressed this issue in recent times with schemes such as NewBuy and FirstBuy which allow first timers the chance to buy a home with just a five per cent deposit.