There was some evidence in the first half of 2010 of the easing of bottlenecks in the flow of mortgage finance. Two mortgage providers, HSBC and Santander (Abbey), tailored sensibly priced products for the market. As a result the two firms have, according to a report in the Evening Standard on 27th May 2010, increased their market share between 2008 and 2010 from 13.7% to 20% in the case of Santander and from 6.7% to 11% for HSBC. Over the same period Lloyds, which includes Halifax, went from 30% to 24% of the mortgage market. In addition, private banks targeting wealthy buyers entered the market, including JP Morgan, Standard Chartered and Investec Private Bank, and are potentially of benefit to Midtown, City and Docklands buyers. According to MoneyExpert.com the number of fixed rate mortgages on offer at a 90% loan to value (LTV) ratio doubled in the year to February 2010 from 78 to 147.

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Overall, however, loan to value (LTV) ratios remain historically low and terms and conditions more onerous than in the past, leaving buyers to find 20%-30% deposits and pay high arrangement fees. The “Bank of Mum and Dad” continued to be a prime source of deposits, with parents and grandparents increasingly utilising equity release plans to get their children or grandchildren on to the housing ladder.

At the national level the Council of Mortgage Lenders (CML) recorded very modest growth in lending, better than the first half of 2009, but still “quiet and subdued”. The General Election and its aftermath dampened the sales market at the end of the first half of 2010. The Emergency Budget and the general level of economic uncertainty at both global and national levels indicate that there is unlikely to be further price growth in Midtown, City and Docklands in the second half of 2010, so we are forecasting stable residential prices over this period. In the rental market, however, the supply and demand factors which created rental growth between June 2009 and June 2010 will still be in place, during the period of the year when demand for London rental property is at its height. As a result, we expect to see a further increase of 5% in rent levels in the second half of 2010.