Mortgage blog: 2013’s mortgage year in review

Posted 31 December 2013

According to Money Marketing, "the past 12 months have brought the kind of buoyant housing market few would have expected this time last year".

At the end of 2012 the UK economy was facing a triple-dip recession and borrowers were still struggling to be approved for a mortgage. Fast-forward a year, though, and much has changed. We look at the big mortgage stories of 2013.

Total lending exceeds expectations

Forecasts from the Council of Mortgage Lenders originally predicted gross lending would reach £156bn in 2013, up from the £144bn advanced in 2012.

In its latest forecasts, published in December 2013, the CML says gross lending will hit £170bn this year - around 10% higher than expected. The CML predicts that lending will rise to £195bn next year.

Government intervention boosted mortgage lending

At the end of 2012, CML chief economist Bob Pannell predicted the Funding for Lending scheme would aid a "modest pick-up' in the UK mortgage market".

However, the scheme has had a major impact. In return for financial incentives banks and building societies were encouraged to offer low-rate mortgages and fixed rates fell to record lows as lenders fought for market share.

The government's Help to Buy scheme has also played a big role in fuelling demand among buyers. The scheme was unveiled in Chancellor George Osborne's Budget in March and the first part, a shared equity scheme for new-build homes, started in April. The second stage, launched in October, encouraged lenders to offer 95% mortgages by providing a government guarantee.

Lenders under fire for rate changes

Changes to standard variable mortgage rates have been a major hot potato in 2013. Over 270,000 Santander borrowers were contacted in April after the Financial Conduct Authority found that letters the lender had sent to customers in 2008 before it increased its standard variable rate cap were unclear.

Clydesdale Bank was fined in September after the regulator found the bank had treated mortgage customers unfairly by miscalculating repayments on more than 42,500 mortgages. And Bank of Ireland and West Bromwich have been criticised for increasing the mortgage payments of thousands of variable rate customers despite no change to the base rate.

A positive outlook for 2014

Despite the government withdrawing the Funding for Lending scheme for mortgages, experts are optimistic going into 2014.

Keith Osborne, editor of, says: "The Help to Buy scheme has been a major fillip for first-time buyers who now have access to w aider range of 95% mortgages. And as more lenders sign up to the scheme in the New Year, rates should start to come down. With over 12,000 mortgage products currently available there is plenty of choice in the market meaning things are looking rosier for borrowers than they have in some years."

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