Don’t Get Too Excited About A Quick Recovery To The Loan Market
Spring is in the air, the nights are getting lighter and people living in the UK are becoming more optimistic about everything in general, but specifically the possibility of economic recovery and an imminent bounce back in the housing and homeowner loan markets.
A new survey, conducted by Rightmove, has shown that consumer confidence levels are improving with regard to the recovery of the housing market and out of those interviewed, 71 per cent of individuals thought that now was a good time to buy a property.
There has certainly been some positive news for the housing and homeowner loan markets over the past few months, with both property sales and interest from potential buyers increasing as well as an increase in the number of loan applications and new homeowner loan products being launched by banks and building societies.
However, the Bank of England has warned against individuals being too confident about a quick turnaround in the UK economy. In a speech this week, the Governor of the Bank, Mervyn King, said that although there were some signs of the beginnings of economic recovery, it is likely that it will be the middle of next year before we start to see full recovery, particularly in the loan markets.
Mr King said “The financial crisis lowered asset prices and revealed the extent of leverage on balance sheets. Correcting those imbalances will require significant and persistent changes in the flow of spending and, in the banking sector, actions to reduce leverage and raise capital. As a result, although the measures taken by the governments to stabilise their banking systems have been truly extraordinary in scale and scope, it is likely that the supply of credit will continue to be restricted for some while, with banks being risk averse and aiming to raise capital ratios.”
