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By Ilona Billington
LONDON--Gross mortgage lending in July surged to an almost
five-year high, a survey showed Tuesday, suggesting government
stimulus packages are boosting housing market activity.
The Council of Mortgage Lenders said it estimated gross mortgage
lending in July was 16.6 billion pounds ($26 billion). That's the
highest level since October 2008, up 12% from June's GBP14.8
billion total and 29% higher than the GBP12.9 billion gross
mortgage lending total reported in July 2012.
"An improvement in sentiment and activity continues to show in
the U.K. housing and mortgage markets, with a more positive picture
also starting to emerge in the economy," said CML market and data
analyst Caroline Purdey. "Our forward estimate of gross mortgage
lending in July reinforces a growing evidence base of a
strengthening in the housing and mortgage markets."
The further rise in gross mortgage lending--which measures all
agreed mortgages without taking monthly mortgage repayments into
account--is in line with the latest run of housing market data.
The average asking price for a home has risen GBP20,000 this
year, according to online estate agency Rightmove. While growing
demand for property, in part due to the government's Funding for
Lending Scheme and Help to Buy have helped to boost U.K. house
builders' profits and performance.
The FLS is helping to increase the availability and cut the cost
of mortgages, while the first phase of Help to Buy opened for
business in April and provides first-time buyers of newly built
homes an equity loan of up to 20% of the value of the property.
"Government measures to stimulate the market (including FLS and
Help to Buy) appear to be part of the reason for the pick-up in
activity according to survey respondents," the Royal Institute of
Chartered Surveyors said last week. The RICS made the comment as it
released its monthly survey showing house prices in the U.K. rose
at their fastest pace in more than six years in July with demand
for homes at a four-year peak.
The increasing demand was also highlighted in U.K.
housebuilders' earnings reports this week. Tuesday, Persimmon said
its underlying pre-tax profits for the six months to the end of
June rose 40% from the same period in 2012 to GBP135.3 million,
legal completions were 7% stronger than a year earlier and forward
sales were 21% higher than in the first half in 2012.
"During the first half of 2013 we have invested further in the
business in support of increasing our future volumes," said
Persimmon's chairman Nicholas Wrigley. "In addition to good growth
in sales and profits we have also reached our target margin range
of 15-17% eighteen months ahead of plan."
That healthy performance comes the day after Bovis Homes PLC
said its pre-tax profit rose 19% in the six months to the end of
June this year from a year earlier, and its average sales price was
15% higher than a year ago, ahead of expectations.
While neither firm commented on government programs in their
press releases, Bovis Homes director David Ritchie said on BBC
radio Monday that the Help to Buy is reassuring the firm that there
is enough demand for homes and helping them to build more.
"Around 500 people have availed themselves of Help To Buy since
it launched with us and that's a real positive," Mr. Ritchie said.
"The key thing for us is activity, its not about pricing. What
we're trying to do is give ourselves a greater level of certainty
that we can start new sites with confidence and build quickly to
satisfy demand. If something like Help to Buy assists us in doing
that then that's a good thing," Mr. Ritchie said.
-Write to Ilona Billington at ilona.billingtojn@wsj.com