Lender expects 80% fall in mortgage market
December 5, 2008
According to a recent report from one of the UK’s major lenders the mortgage market in the UK could plummet this year, and could end up at just one fifth of the level that it was at last year. Officials from Nationwide have said that based on the amount that the lender approved for borrowers in the six months to September of this year the end of the year may end on an 80% slump in the mortgage market compared to just twelve months ago.
Between April and September the Nationwide lent just £1 billion worth of new mortgage loans, and this compared to a massive £3.6 billion in the same period last year.
An official from Nationwide stated: ‘We believe that the mortgage market could be as low as £18bn this year while it was in excess of £90bn last year. It is already down to a third of last year’s levels and heading lower. Our share of the net new mortgage market has remained steady at around 6%.’
He said that the mortgage market was set to remain very challenging, and confirmed that the building society had passed on the recent 1.5% base rate cut to borrowers, but not in response to calls from the government but in response to what their customers need.
He stated: ‘Wholesale market conditions remain fragile. We expect the challenging economic environment in the UK to persist well into 2009. ‘We do what is right for our members rather than looking after politicians.’
The mortgage industry has been struggling for the past year since the onset of the global credit crunch, and in addition to credit conditions becoming far tighter and more difficult to obtain, the level of mortgage approvals has also fallen due to fewer people applying for these loans because of falling house prices, which pose the threat of negative equity.
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