The information contained within the following news articles have been pre published. The articles were published on the dates indicated and the information contained within these issues include references to taxation, legislation, regulation and other issues or concerns that may no longer apply
What State Is The Mortgage Industry In And Why Aren’t They Lending
As we all know, one of the main culprits of this economic downturn is the property market. People who are selling can’t get buyers, and people looking to buy can’t get mortgages.
So what exactly is going on in the mortgage industry?
Mortgage lenders show no sign of picking up, according to the latest figures from the Council of Mortgage Lenders (CML). The gross new lending figures, for both house buyers and those re-mortgaging, fell by 1% in July to £12.6bn. This is 6% less than the figure for July last year. They described the property market as "subdued, but pretty stable" and warned that sales might fall in the coming months…as if people weren’t struggling enough as it is.The chief economist of the CML, Bob Pannell, said: "Underlying house purchase activity may drift lower over the coming months. UK economic prospects have deteriorated as a result of weaknesses in some of the major economies and renewed stresses in the Eurozone area associated with the sustainability of government finances.” He went on to add: "As a result, UK interest rates look like staying lower for longer."
However, last week the governor of the Bank of England, Sir Mervyn King, warned that the UK economy would grow at a slower pace than previously expected, not reversing, like CML are implying.
The minutes of the latest meeting of the Bank's Monetary Policy Committee, published yesterday, indicated that its members showed no enthusiasm for a rise in interest rates in the short term, which has lead to a decrease of fixed rate mortgages recently as people opt for more varied rates.
Peter Rollings, of Marsh & Parsons Estate Agents said: "Lending remains a world away from the level we need to see for the national housing market to pick up steam again." He added: "Despite the recent improvement in mortgage rates, demand for mortgage finance is still being thwarted by overly strict [lending] criteria." I feel the banks are suffering from the ‘once bitten, twice shy’ problem.