Mortgage Loan Market May Have Reached Bottom
Over the course of the past twelve months, new lending on mortgage loans has plummeted, due to a lack of liquidity across the banking sector and falling house prices lowering consumer confidence in the housing market, but although activity within the property market is at an all time low level, approximately 65 per cent lower than at the same time last year, there is a certain amount of cautious optimism creeping back into the market, as new figures released by the British Bankers Association (BBA) suggest that the situation may be starting to stabilise.
The suggestion comes after the figures from the main high street banks and building societies showed a slight increase in new mortgage loans being approved for two successive months in June and July this year.
However, the BBA are not getting excited just yet as, although there has been two months of growth, the home loan market remains at an extremely low level, with new mortgage approvals for purchases increasing slightly, but remortgaging activity actually reducing by around 21 per cent in July against the same period for last year.
David Dooks of the British Banking Association commented that although the figures showed a stabilising market, it will take a long time for a full recovery in the housing and mortgage loan market.
He said ”The monthly numbers of approvals for house purchase, which have fallen by two thirds over the last year, levelled off in July. It would however, be premature to think that the housing market will now start to recover, because overall approval activity continues to be very low. The pressures on household budgets are reflected in the relatively weak rise in individuals’ deposits and with consumer borrowing growing only slowly it seems that consumers are acting prudently.”
