The Last Thing The Volatile Housing Market Needs Is A Shrinking Pool Of Mortgage Availibility
Slow growth of the UK economy since the financial crisis has been a concern for those looking to buy a home, and even more worrying is that there have been figures released confirming that although growth rates were pleasing in the first quarter, they are now slowing down.
Recent figures showed that net lending in the UK rose very slightly in March 2011 compared to a significant increase between January and February, indicating that a quick recovery is far from certain.
The number of mortgage approvals in the first quarter of 2011 is down by over 10,000 on the last quarter of 2011. Global Insight reports that the current figures are almost half of the number of approvals that would be consistent with a more stable property market.
One expert believes that the final quarter of 2010 was a blip rather than an early boom for the housing market. Lending and house sales increased towards the end of 2010 as more first time buyers then normal were looking to get onto the property ladder and this seems to have skewed the figures.
Whilst lower than expected numbers of mortgage and remortgage approvals are adversely affecting the industry, it may not be such a bad thing for buyers looking to enter the housing market.
Global Insight has drawn attention to the more general economic problems caused when considering an hike in house prices, showing that such increases are unsustainable in the face of high unemployment, rising underemployment and growth of low earnings. The group states that such factors are greatly damaging to the prospects for house price rises in a market where credit is seriously restricted and high quality remortgage deals are thin on the ground.
It has also been said by certain mortgage organisations, that although the economy is still very slow, there are still some very cheap and competitive remortgage deals available on the market.
He said: “Household finances are under a lot of pressure and as a result demand for house purchase loans fell in the first three months of 2011.”
The economist also believes that the improved availability of mortgages is crucial to stabilise the current property market. He believes that lenders are likely to make more credit available in the next quarter although he thinks that that this will support the market rather than providing a substantial boost.
The CML economist also pointed to the fact that February 2011′s mortgage approval figures were amongst the highest seen in the last two years, suggesting that the market is starting to pick up. He also reported that the demand for remortgages from homeowners remains strong, partially due to the prospect of interest rates rising as inflationary pressures continue to bite. Many consumers are looking to fix their mortgage payments in advance of possible interest rate rises. Mr Parnell also believes that increased numbers of remortgages will help support overall mortgage lending in the UK.
Timothy Frodsham writes for JustRemortgages.com one of the UK’s top sites for the latest remortgage rates and best remortgage deals.