Mortgages Uncovered

The British Bankers Association released figures this week showing how the UK mortgage market is still deteriorating.  Most of the mortgage lending in February was accounted for by remortgages only, rather than new mortgages.

In fact, year on year, the number of mortgage approvals fell to just 43,870, very close to a record low.

With many mortgage lenders either increasing their mortgage interest rates or even withdrawing their products completely, this shows how much the credit crunch is putting pressure on the UK banking sector.

Global Insight’s chief UK economist, Howard Archer, said:

“Housing demand will be hit by fewer and more expensive mortgages being available, furthermore, there is a growing danger that the UK economy will suffer recession, or extended weak growth, and that unemployment will increase significantly. This would be liable to lead to a marked increase in the number of people having to sell houses for distressed reasons, particularly given the extent to which many households have had to stretch themselves to the limit to buy a house.”

Archer predicted that house prices will fall by another 5 percent this year with a risk of a full scale housing price crash.

The British Bankers Association figures also showed that unsecured lending is also down.