Perhaps this new year will be much better for the housing market than previously expected.  According to many experts the expectation was that the housing market and mortgage lending levels would be stable and little excitement was due.  However, according to the Council of Mortgage Lenders (CML) house sales as well as mortgage lending are due to increase in 2013.

The increase in lending is being credited with the Bank of England’s Funding for Lending Scheme (FLS) that began in August of last year.  The scheme offers a source of funding for lenders at a cheaper rate than the global lending market.  The impact is that funding remains readily available and at lower interest rates than what would otherwise be seen.

Because of continued low interest rates on mortgage offerings it is expected that borrowers will find the offers more appealing.  In addition the effect will mean an increase in sales and a boost to the property values of homeowners hoping for relief from dropping equity levels. 

The CML reported that last year there had been an increase in sales in the housing market and that there was no reason to not expect another rise in this year as long as the economy remains steady or strengthens.

Bob Pannell, chief economist with CML, stated, “Whereas the Funding for Lending Scheme was conceived by the UK authorities to mitigate the worst impacts of a potential fresh credit crunch, its launch has in fact coincided with a more positive external funding environment, in part due to European Central Bank actions.

"Given this more benign context, in our view the FLS now has the potential to underpin a modest pick-up in mortgage lending activity.

"A key test, however, will be the extent to which greater borrower appetite materialises in response to better credit availability.”