After a slow start to the year, Chancellor of the Exchequer George Osborne's March Budget took major steps to inject new life into the mortgage market through the announcement of the Help to Buy scheme. Offering mortgage guarantees of up to 15 per cent for first time buyers on new build properties, the first wave of this initiative was designed to help creditworthy homebuyers surmount the barrier created by banks demanding higher deposits following the crash.
Five months later, August data provided the welcome news that house prices had returned to pre-crash levels as Help to Buy and the Funding for Lending scheme began to refuel mortgage lending. This progress was soon followed by the news that the second phase of Help to Buy would extend the scheme to current homeowners and for all properties.
Aldermore was one of the first banks to announce involvement in this next phase, launching the Bank's Help to Buy guarantee mortgage range in December. Alongside this launch, the month also saw news that mortgage lending increased 30 per cent year on year, though fears of a housing bubble were subdued by the fact levels remain well short of the 2007 peak. As expressed by Bob Pannell, chief economist for the Council of Mortgage Lenders;
"Gross lending for 2013 looks set to reach £170bn - higher than the £156bn we originally forecast, but still a far cry from the £363bn experienced at the height of the lending boom in 2007."
With the mortgage market in recovery, many consumers were calling for government to redress the balance for savers in the Autumn Statement. In a bid to stimulate lending, interest rates haver remained at a historic low throughout 2013, causing average personal savings to drop from 6.8 per cent of disposable income in 2012 to 5.7 per cent in 2013.
Unfortunately for savers, priority remained with borrowers in the Autumn Statement, with government unwilling to threaten continued growth by raising interest rates too quickly.
This decision represents an effort to boost business lending in particular, since many cautious businesses are still choosing to build up cash reserves instead of investing as the economy begins to pick up.
Moving forward into 2014, Aldermore hopes to see strong progress continue for both homebuyers and businesses, enabling the government to look towards improving the situation for savers in the next few years.
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