The data for April has just been released by the Council of Mortgage Lenders and it paints a grim picture of the mortgage market in the UK. In fact, mortgage lending has ground to a halt and it is now at the lowest in 12 months.
The underlying reason for lenders’ reluctance to part with money is the growing fear that property prices will continue to fall and many are already in negative equity. Larger lenders like Santander are scaling back lending whist newer companies are making an effort to make headway into the mortgage market.
A statement in The Telegraph quotes an economist with HIS Global Insight as saying this latest data reinforces their belief that prices are going to drop even lower in the months ahead. By the end of this year, Archer predicts house prices will fall by as much as 3pc.
However, there are those who believe that home mortgage lending is actually recovering and according to the chief economist for the CML, house lending is actually ‘upbeat’ painting a better picture than their statistics indicate. Bob Pannell believes that lending will actually be ‘stronger’ than the figures from April would tend to indicate because of activity brought forward from March with first time buyers trying to beat the stamp duty.
Even so, with the rampant uncertainty in the eurozone, there is a likelihood that the UK economy will be undermined if it falls apart and this will worsen conditions in the mortgage and housing markets. Other chief executives such as Mark Harris of SPF Private clients believe that the fall in the market figures from April were the result of first time buyers rushing to beat the deadline and that the crisis is far from over. Much depends on the outcome of developments in the eurozone.