Forum Brief: House prices

The latest statistics have suggested that the housing market has remained strong.

But despite a monthly increase, lending for house purchase was lower than in the same month last year.

The Council of Mortgage Lenders' monthly statistics showed that total gross mortgage lending totalled £19.3 billion in March, up from £17.6 billion in February and £16.1 billion in March last year.

As the figures are released, the CML has questioned whether the government is doing enough to ensure the housing market remains stable.

Forum Brief: Council of Mortgage Lenders

Michael Coogan, director general for CML, said: "It is the CML's view that a key issue for the government's review of the consumer and market appetite for long-term fixed rates is the comparative cost of variable and fixed rate funds.

"The mortgage market is still performing very strongly, although remortgaging is the main driver of the current buoyancy. It is still too early to say whether the housing market has yet passed the turning point towards a slow down in house prices and transactions.

"The lower year-on-year level of lending for house purchase suggests the market may be returning to more normal levels, although it is important not to read too much into a single month's figures."

Forum Brief: Building Societies Association

Adrian Coles, director-general of The Building Societies Association, said: "BSA figures show gross advances amounted to £3,369 million in March 2003, increasing from £2,670 million in March 2002.

"The housing market in the UK is very competitive, partly thanks to building societies challenging mortgage banks on pricing. This is because of Building Societies' mutual status, which means they do not have to pay dividends to shareholders.

"The market is led by consumer demand, and figures out today show that approvals are still running at a very high level, showing that people are still looking for mortgages and are coming to building societies for a good deal.

"New approvals are substantially up on a year ago, but slightly down on last month. At the moment customers are taking advantage of the competitive market and low interest rates by remortgaging.

"It will be interesting to see the results of the review into long-term fixed rate mortgages recently announced by the Chancellor, especially in terms of how such mortgages will be funded and whether there will be a upturn in consumer demand for these products."