Mortgage market could slump massively by end of year
December 10, 2008
As most people will be only too well aware the mortgage market in the UK and in other parts of the world has slumped over recent months, and for over a year, since the onset of the global credit crunch, nations have been suffering huge financial problems, with liquidity in the financial markets all but grinding to a halt. In the UK and other nations this has resulted in radical changes in the mortgage market, which has slumped enormously as the days of easy credit disappear and a new approach to lending comes into play.
In the UK consumers have seen the number of mortgage products on the shelves fall by over two thirds in the space of a year, the availability of 100% and 125% mortgage disappear, increased arrangement fees on mortgage products, higher deposit level requirements from lenders, and far stricter lending and eligibility requirements come into play. All of these have affected the number of mortgages that are being approved, and with banks being increasingly cautious about who they lend to this has led to a real slump.
The matter has not been helped by plummeting property prices, with house prices having fallen month of month for a year. With further house price falls widely predicted many would be buyers are too nervous to take the plunge even they could get a mortgage, and this is in case house prices do fall further and they are left in negative equity. Despite changes being made the stamp duty by the government to try and encourage would be buyers to take the plunge, this has also affected the number of mortgages going through.
Furthermore, the situation is set to get worse. Officials from the Nationwide Building Society have recently reported that they expect the mortgage market to fall to just a fifth of the level of last year by the end of this year, which would mean that in a year the mortgage market would have slumped by 80% in total. The building society lent just £1 billion in new mortgages between April and September of this year, and this was a huge drop from the £3.6 billion lent during the same period last year.
An official from the 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 added: ‘Wholesale market conditions remain fragile. We expect the challenging economic environment in the UK to persist well into 2009.’
The government has come up with a bailout plan to try and rescue the banks and the mortgage market, and this has been welcomed by many lenders, who hope that the cash injection could help to increase liquidity and get the market moving again, but many experts have predicted that this will take a lot longer than some may imagine.
- Property prices could fall by 35 percent before they rise again A leading economist has warned that house prices in the UK could be set to fall by as much as 35 percent in total before they start to go back up again. The warning comes
- Property sale slump could mean surge in home improvement loan applications According to a recent report the slump in property sales in parts of the UK could result in an increase in applications for home improvement loans, as homeowners resign themselves to the fact that they
- Property website reports loss of three hundred estate agents a month The property website Right Move has recently reported that each month around three hundred struggling estate agents are quitting the service, as the housing market continued to decline and the housing slump affects the estate
- First time buyers - do they benefit more from buying over renting? A recent report has suggested that although house prices are falling, mortgages have become more expensive, and credit conditions are tighter than ever, many first time buyers could still be better off purchasing a property
- Mortgage lending for November takes a tumble According to figures that were recently released by the Council of Mortgage Lenders mortgaging lending levels have fallen again for November. Experts state that this is yet another sign of the cooling housing market. Industry
Comments
Got something to say?