The recent increased levels of interest in the housing market seem to be continuing their upward trend at the moment, as the seasonally adjusted figures for new loans for house purchase have shown another increase in the total number of homeowner loans being approved through the months of both March and April this year.

March saw a total of 26,671 new homeowner loans, with another 27,685 new loans in April, against a six month average figure of just 23,812. Low interest rates on loans and more affordable house prices finally seem to be starting to encourage people back into the housing market.

However, the same cannot be said for the remortgage market. The total number of remortgage loans fell in April to 44,827, from 47,536 in March and a six month average figure of 55,517. This not only reflects the current low level of interest rates on loans, but also the large margins which banks and building societies are currently applying to their homeowner loan products. Borrowers who are coming to the end of their initial deal with their current lender are invariably better off by remaining on their existing lenders standard variable rate, rather than switching to a new loan provider.

David Dooks of the British Banking Association (BBA) said “The house purchase part of the mortgage market appears to have stabilised, with slightly more approvals coming through, although April’s weak mortgage lending reflects the lower number of approvals in previous months.

Household’s uncertain financial circumstances not surprisingly continue to dictate consumer behaviour, both in the housing market and in generating only low demand for new personal loans. Company borrowing also reflects the economic backdrop, with most non-financial sectors seeing net repayments, although short term finance for other financial companies unwound in the month, suggesting that their financing needs may be easing.”

Three of the UK’s most traditional names in the banking and homeowner loan sector are to disappear from the high street altogether by the end of next year.

The Bradford and Bingley, Abbey and Alliance and Leicester will all lose their individual identities by the end of 2010 and fall under the banner of the Spanish Santander group, who has managed to acquire two of the three institutions over the course of the past two years, as they have suffered financially from the effects of the credit crunch.

Abbey has been part of the Santander group since 2004 and their logo and corporate identity has already changed to match that of the parent company even though the name has remained for now.

The names may remain in certain areas, for example, Santander only bought the savings part of the business for the Bradford and Bingley, with the government taking over the loan part of the business and the large amount of bad credit loans which the company had on its books. The Abbey for intermediaries name will also remain for the sale of homeowner loans through the intermediary and loan broker sector.

Antonio Horta-Osorio, head of the UK business for Santander, emphasised the positive move for customers with any of the existing companies. He said “We know from speaking to our customers that they value and appreciate the strength and financial security that being part of a world class global bank offers particularly in the new global banking environment. Bringing together the three brands means it will be even easier for customers to manage their finances as they will have access to over 1300 branches once the change is complete. With this in mind the time is right to make the move to a single UK identity as Santander, a powerful new force in the UK banking.”

Since the onset of the credit crunch, it has become extremely difficult for anyone looking for additional finance to be able to obtain the loan they require, at least at reasonable interest rates, even if the applicant has a perfect credit rating.

But for someone with a poor credit rating, or problems in their financial history, in many cases it has become almost impossible to obtain a loan, due to the fact that almost all the subprime lenders who offer bad credit loans have been forced to withdraw from the market place in the current economic climate. As a result of this, more and more individuals who have become desperate for funding have turned to loan sharks to meet their needs.

The New Local Government Network (NLGN) has now become concerned at the increasing number of people who are turning to loan sharks, who often charge extortionate rates of interest to borrowers, as they cannot get a loan through more traditional lending routes.

The NLGN believe that there are somewhere in the region of 200,000 individuals in the UK who could be vulnerable and fall victim to loan sharks and they have called on local authorities to provide additional help to this sector of the community by increasing the availability of credit unions and council banks, as well as taking enforcement action against known loan sharks in order to provide additional protection to some of the most vulnerable members of the community.

Chris Leslie, who has written the report and has highlighted the need for action said “Local government has historically been at the forefront of new service provision where community needs exist and have the advantage of proximity to their front line and prime local knowledge. Further intervention from local government is a crucial step and we look forward to strong leadership from the sector at a time of great urgency.”

Estate agents in the London area have noticed a dramatic turn around in the property sales market over the course of the past two months, as the market has turned in the favour of sellers rather than those looking to buy a new house.

Cluttons estate agents have reported that due to a shortage of property on the market, those people looking to buy are now struggling to find the house they want and in a number of cases, properties are being sold on a sealed bid basis once again, with demand for new property for sale returning to the pre credit crunch levels of 2007.

With the drop in value of houses over the past couple of years, many people who may have otherwise placed their home on the market have decided against selling, at least until prices increase once again, leading to a significant shortage of property on the market. From a buyers point of view, reduced prices and the current low cost of a homeowner loan or mortgage, particularly for those who only require a low loan to value ratio on their purchase, means that now is an attractive time to think about buying, which in turn has the effect of pushing up demand.

This increase in demand has led to an increase in property price in the London area and it seems likely that this change in the situation could well be seen across the rest of the country in the coming months. Increasing property prices are also good news for those looking for a loan to purchase their home with, as increasing prices mean a reduced level of risk for banks and building societies who will therefore be able to relax their lending criteria on their loan products and offer higher loan to value products at hopefully cheaper interest rates.

We reported earlier this week on how buyers are beginning to return to the housing market and in particular first time buyers, many of whom are now taking advantage of much lower house prices and managing to build up larger deposits in order to reduce the amount of loan to value they require on their homeowner loan.

As part of the government’s initiative to provide a boost to the housing and loan markets and help first time buyers enter the market, the Chancellor, Alistair Darling, announced in April that more money would be made available in the form of new loans to first time buyers, but so far the funds are not forthcoming and many potential buyers are still waiting for the government loan they applied for.

Mr Darling announced that there would be an extra £80 million made available to support the Shared Equity Scheme Homebuy Direct. This scheme is designed to offer loans of up to 30 per cent of the purchase price to first time buyers on an interest free basis for the first five years of the loan, in an attempt to encourage this sector back into the market. However, whilst the government say that they are still committed to the scheme, there appears to be a problem in managing to get the necessary loan funding to the people who actually need the money.

The funding from the government will be distributed via housing associations, but so far there appears to be a blockage somewhere in the system, as thousands of first time buyers who have applied for these loans are unable to complete their purchases due to waiting for the additional funding. According to figures from the Chancellor, it was anticipated that between 12,000 and 18,000 individuals would apply for the loan scheme, however there have been around 32,000 applications since the scheme was launched, just going to show that the government have severely underestimated the situation once again.