According to a survey by the UK Council of Mortgage Lenders, the value of new lending fell from an average of GBP45,000 in 2005, to GBP41,000 in 2006, despite recording a rise in the number of new lifetime mortgages from 23,215 in 2005 to 23,786 in 2006.
The Council of Mortgage Lenders, (CML), reported that new lifetime mortgage lending fell to GBP971 million in 2006, as compared with GBP1,048 million in 2005. It added that the trend towards smaller loans grew more pronounced as 2006 wore on, as by the fourth quarter, the average new loan was only GBP38,400; the lowest recorded value since CML began its survey in 2002.
The trend towards smaller loan amounts on lifetime mortgages suggests that lenders and intermediaries are being careful to ensure that people are only borrowing what they need, commented Jackie Bennett, CML head of policy. This is all good news for older people looking to release equity from their homes. Specialist advisers on lifetime mortgages are clearly beginning to adopt good practice.
Recent UK Financial Services Authority advice on good practice in the industry included specialist lifetime mortgage training programs for advisers and compliance checking of cases before final recommendation. Ms Bennett commented that the advice would see confidence in the market grow looking forward.
The CML concluded that despite the trend towards smaller loans, the total value of UK lifetime mortgages outstanding has now exceeded GBP6 billion. At the end of 2006 the figure stood at GBP6.6 billion, as compared with GBP5.3 billion at the end of 2005.