Mortgage lending still subdued, say banks

Mortgage lending to house buyers is still subdued, according to the British Bankers' Association (BBA).

Its latest figures show that the number of mortgages approved in February by the big banks was 35,275.

This was only slightly higher than in January when 35,154 loans to home buyers were approved.

The BBA said the market was still depressed by a rush by buyers to beat the end of the stamp duty holiday at the end of last year.

"House purchase approvals were some 16% higher than in February last year but still well below the figure in December as the aftermath of the year-end change to stamp duty was still working through," said David Dooks of the BBA.

"The average value of house purchase approvals (£140,800) was 11.5% higher than a year ago.

"Volumes of remortgaging and equity withdrawal approvals continued to be lower than a year earlier," he added.

In February 2009, mortgage approvals stood at 30,457 as lending started to recover steadily through the year.

That upward trend has been brought to a halt, at least temporarily, as a result of the stamp duty threshold being brought back down from £175,000 to £125,000.

Some of the plans to restrict mortgage lending, put forward last year by the Financial Services Authority (FSA), have split the mortgage lending industry.

The FSA has been consulting on its plan to ensure that all lenders check that their borrowers can afford to take on and repay their mortgage loans.

"Our proposal to make income verification a requirement for all mortgages generated a polarised reaction," the FSA said in its feedback document.

"Objections were raised mainly by large lenders, who argued that the proposals would impact negatively on the self-employed, which will trigger an increased usage of fraudulent income documentation".

Posted at 08:03PM Mar 24, 2010 by Kelly Board in The Economy  |  Comments[0]

Rent Deadline Threatens Retailers

The high street is bracing itself for a wave of retail collapses this week as a huge rent deadline looms.

Wednesday will be one of four so-called “quarter days” where rents have to be paid three months in advance, a system seen by many retailers as archaic.

Richard Fleming UK head of restructuring at the KPMG, said: “The March rent quarter date may be the nail in the coffin for retailers who have not traded well over the past few months.

“Creditors effectively have to decide now whether to support businesses now through to the end of the year."

High profile retail magnates including Topshop boss Sir Phillip Green have been lobbying the government for a change to the system, but until it is overhauled this rent deadline could spell the end for many business who are already teetering on the brink due to recessionary pressures.

Many retailers are currently in the process of negotiating with landlords a switch to monthly rent payments to bolster cash flow. Other solutions include disposing of empty or underperforming stores, through company voluntary arrangements (CVAs).

Rarely seen until the recession, CVAs have become more common as businesses face the threat of failure. They allow companies under threat of administration to renegotiate debts with unsecured creditors but some landlords regard them as a tool to escape individual lease liabilities.

Posted at 04:28PM Mar 24, 2010 by Marc Stenton in Insolvency  |  Comments[0]