Demand from housebuyers has hit a three-year high amid signs that the mortgage drought is easing, raising the prospect of a housing market boost that could help restore consumer confidence.
Surveyors said there had been a “considerable rebound” in interest from would-be buyers during October, with a balance of 18pc firms more reporting rises in new buyer enquiries than falls, the latest market study by the Royal Institution of Chartered Surveyors (RICS) found.
At the same time, mortgage lending jumped by 13pc in the three months to September, according to separate research by the Council of Mortgage Lenders (CML).
A lack of buyers has hurt prices, which are 0.9pc lower than October last year, according to Nationwide, as sellers have had to cut asking prices to lure bidders. A lack of mortgage finance has been blamed for the problems in the market, with first-time buyers priced out because few lenders offer deals with small loan-to-value ratios.
However, RICS found that “the growing optimism shown in recent months may slowly be translating into an upturn in activity” and that “prices across the UK continued to stabilise”. Until October, it added: “Interest from would-be buyers had remained relatively subdued since December 2009.”
Surveyors are optimistic that the increased buyer interest will translate into rises in sales, with a balance of 25pc more surveyors predicting that transactions will rise rather than fall in the next three months. More properties are coming on to the market as well, RICS said.
Coupled with the CML’s finding of a 13pc increase in mortgages during the third quarter to 146,500, market specialists said the signs were promising. They added that the Bank of England’s Funding for Lending Scheme (FLS) to help homebuyers and businesses access cheap credit is also beginning to have an effect.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The mortgage market is still constrained but is showing signs of easing. Money market rates are falling as the FLS continues to have an impact on pricing.”
He cited the Co-operative Bank’s recent offer of a two-year fix pegged at 3.99pc with no fee for those with just a 10pc deposit as an example of the improving loan conditions.
The sharp improvement in mortgage lending in the quarter was achieved despite a slump in September when 44,400 loans were advanced, down from 53,900 in a particularly strong August and lower than 48,800 loans in September last year. Lending to first-time buyers in the month also slipped 14pc compared with August, with 17,900 loans worth £2.3bn advanced.
However, Paul Smee, CML director general, said: “An increase in house purchase approvals indicated by the Bank in September suggests that we may see a return to growth in coming months.”
Ian Perry, RICS housing spokesperson, said: “The number of potential buyers going out and viewing property saw a welcome boost. Those who are in a position to buy decided to get out there and see what is available.”