Home Owner Loan Market Stagnating
Since the onset of the credit crunch, the housing and home owner loan markets have been struggling as potential buyers are either unwilling, or unable to get the home owner loan or mortgage they need and banks and building societies have restricted their lending criteria to only allow the perfect borrowers to be able to get the loan they want.
Despite some more positive figures during the second half of last year and many new loan products entering the home owner loan market, the market as a whole has been described as being “stuck in a rut” by the Council of Mortgage Lenders (CML).
The latest figures from the CML have shown that the number of new loans being offered throughout the month of February, was almost as low as the figure for January this year, with total gross lending of just £9.5 billion.
One of the main factors in the poor lending figures is due to lender’s unwillingness to offer loans to borrowers at reasonable and affordable rates, along with only offering low loan to values for those who do actually meet their lending criteria.
Another factor is lack of consumer confidence in the UK economy. With the prospect of further government cuts leading to job losses, high inflation and the probability of rising interest rates in the next few months, many would be buyers have been put off the idea of committing to a large new loan.
A spokesman said “The fierce competition among renters in many areas of the country has cut short the traditional lull we tend to see between December and February.”
“The consistently constrained level of lending to home buyers has bolstered demand and rents, in the private rental sector during what is typically a slower period. With the mortgage market even more sluggish since the start of 2011, this backlog of frustrated buyers has increased even further and rents have risen correspondingly.”
