According to recent figures mortgage lending levels in the UK remain subdued, as the global credit crunch continues to wreak havoc in the financial markets. Figures were recently released by the Bank of England, and showed that mortgage lending levels were continuing to fall, with tighter lending conditions and fewer applications from cash strapped consumers contributing to the lower figures.

One official from the Royal Institute of Chartered Surveyors stated: “It is improbable that the bottom of the cycle has not yet been reached given the latest announcement that Nationwide is following the lead of other lenders in requiring new borrowers to now put down at least a 10 per cent deposit to secure a mortgage. This is set to intensify the already significant pressure on first-time buyers.”

Howard Archer from Global Insight stated: “Despite the Bank of England’s special liquidity scheme, there are currently few signs that credit conditions are loosening significantly. Consequently, funds for mortgage lending seem likely to remain limited for some time to come while market interest rates are still high.” Another economist added: “Lenders will remain cautious. And even if the availability of mortgages does increase, the growing expectation of further house price falls might deter new buyers anyway. Accordingly, house prices look set to keep falling.”

One industry official said: “If this trend continues it would tend to point to rate cuts despite the fact that the Monetary Policy Committee is known to be walking the tightrope at the moment.”

Another commented on the rising cost of mortgages, stating: “The outcome is consistent with the tightening in lending conditions and raising of mortgage rates that has essentially been designed to discourage borrowers – job done.”

Recent additions:

• How will government help struggling homeowners?
• Mortgages could continue to get more expensive
• Abbey takes huge slice of the mortgage market
• First annual fall since 90s for house prices
• Mortgage approval levels remain on a low

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