Mortgages Uncovered

Mortgage lending in the UK dropped by 30% during 2008 which is the lowest level since 2002, say the Council of Mortgage Lenders (CML).

The total lending for last year equated to £256.4 billion, in comparison to £363.7 billion during 2007, as the credit crunch took hold and triggered a drought.

Now market analysts are saying that although loans may slowly become more accessible to people, the falling house prices will still leave many reluctant to purchase.

Mortgage lending was at its lowest in December since April 2001, Michael Coogan at CML stated:

“December is typically a quiet month in the mortgage market, on top of which the market has been constrained by a shortage of funding and reduced demand.”

With regard to the current market and the government intervention Michael Coogan commented:

“A market solely funded by a few large banks and building societies would be unlikely to have the capacity to match future consumer borrowing demand, or be as competitive in the long term as the UK market has been before the credit crunch,” he said.

Some analysts seem to be more skeptical regarding the government intervention.

“With the economic situation deteriorating by the day, the banking system in crisis and consumer confidence at an all time low, it’s hard to believe mortgage activity will pick up any time soon, whatever the government does,” said Toby Goldblatt of financial adviser search engine Rubii.co.uk. “Even if banks do start lending more, the question now is will people want to borrow? “Faced with such uncertainty, the last thing on many people’s minds will be moving house.”