Home Owner Loan Market Subdued
The recent economic situation within the UK and the prospect of an uncertain future over the course of the next few years, seems to have made many would be borrowers extremely reluctant to commit to a new loan at the present time.
The latest figures for the total number of new home owner loans and mortgages which were agreed for the end of last year, show that the market was particularly quiet throughout the month of December, with the whole of the secured loan industry seeing a subdued market towards the end of the year.
The figures from the Council of Mortgage lenders (CML) have shown that the total amount of new loans for December stood at just £11 billion, compared with £11.7 billion over the course of the previous month, showing a decrease in the number of new home owner loans of around 6 per cent.
This has now been four consecutive months where the number of new loans has decreased and the increase in the VAT rate and possibility of an increase in the Bank of England base rate of interest in the coming months is likely to do little to encourage potential borrowers to take out a new loan of any kind.
New home owner loan figures are around 18 per cent lower for last December than they were for the same time twelve months earlier, although these figures are likely to be distorted due to the surge in home owner loan applications to beat the end of the stamp duty holiday in 2009.
Peter Charles of the CML said “Against this backdrop, consumer demand may be weaker than we would have otherwise expected. Higher interest rates will also hit the budgets of existing borrowers, although the expected modest rises in base rate will result in a relatively small proportionate rise in monthly loan repayments for most mortgage holders.”
