New Loans For House Purchase Fall By Almost Half In A Year
The effects of the credit crunch and the inability of banks and building societies to be able to offer new homeowner loans to potential buyers has had a dramatic impact on the housing market as a whole throughout the past year, but the latest figures from the Council of Mortgage Lenders (CML) have revealed just how desperate the situation has become.
According to the CML, the total number of new homeowner loans for house purchase had fallen to 49 per cent of the previous year’s figures with only 516,000 new loans being issued throughout the course of 2008, the lowest level since 1974.
The total number of homeowners who remortgaged their property also fell by 26 per cent over the year, as many borrowers found it was cheaper to remain with their existing loan rather than change provider.
There are large numbers of individuals in the UK who are desperate to either move house, or buy for the first time, but are unable to do so due to the fact that they are unable to obtain the necessary funding through a suitable loan and until banks and the Government resolve this issue, the problem is likely to remain.
Michael Coogan of the CML said “The shortage of mortgage funding and reduction in the number of active lenders has reshaped the mortgage landscape in the space of a year.
This low level of transactions is insufficient for the functioning of an efficient market. Measures are now in place to seek to restore the flow of funding to the mortgage market, but this will take time to feed through. Further action may still be necessary to increase transactions, stabilise prices and restore confidence.”
