Encouraging set of figures for UK housing market, says ITEM Club - FLS is beginning to work and should support pickup in activity this year
Nida Ali, economic advisor to the EY ITEM Club, comments on today’s lending figures:
- An encouraging set of figures for the housing market
- FLS is beginning to work and should support a pickup in activity this year
- The trend for unsecured lending seems to be improving as well
“An encouraging set of figures for the housing market. The increase in mortgage approvals and rise in net lending supports the Bank of England’s latest Credit Conditions Survey, which reported an increase in the availability of secured credit to households, as well as the recent RICS survey.
“Coupled with the fact that interest rates on new mortgages have been decreasing steadily, these figures suggest that the Funding for Lending Scheme (FLS) is beginning to have a positive impact on mortgage markets. FLS isn’t going to be the silver bullet, but we should see activity continue to rise through the year, followed by prices next year.
“Unsecured lending is starting to improve as well. The rise in consumer credit is firmer than we had expected, given the weak retail sales figures in December, and the year-on-year growth rate is on a steady upward trend.
“Today’s figures provide further hope that the consumer sector is finally on a gradual path to recovery. Although confidence is still fragile and households are wary of racking up more debt, we expect consumer spending to become an increasingly important support to GDP growth through the year, founded on higher employment and rising real incomes.”