Problems with mortgages could go on for years to come
September 4, 2008
Since last summer, which is when the global credit crunch made its way from the US to the UK, the mortgage market has been in chaos, and both lenders and consumers have been suffering. Decreased liquidity in the wholesale money markets has resulted in lenders suffering extreme difficulties in securing funds to finance their mortgage lending operations, and this is turn has resulted in a reduction in the number of mortgage products available and tighter credit conditions that have made it harder for many people to get a mortgage.
Many lenders have been putting their mortgage interest rates up over the months despite cuts in the base rate, but more recently a number of lenders have reduced the interest rate on their mortgages. However, whilst this may seem like good news some industry officials claim that it is not a sign that the mortgage market is going to stabilise, and the problems on the mortgage sector could continue for a number of years before things start to get better.
One industry official said: ‘This is not the start of a new dawn. Massive supply problems remain.’
He also said that as the mortgage market continued to go through turmoil things were likely to get much worse in the housing sector as well. He said that the mortgage situation would impact on house prices, piling on downward pressure whilst making it harder for potential buyers to get a property.
Another official commented on the slowdown in the housing market, which has been made worse by government dithering over whether to suspend stamp duty. He said: ‘With the Chancellor’s confirmation that he is considering a temporary suspension of stamp duty, housing transactions will diminish further until he sets out his proposals. Who will want to commit to a property purchase now when it is probable that by waiting a few months they could save thousands of pounds?’
Recent Additions:
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- HBOS sees mortgage jobs cut
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