Mortgage lending has fallen, new research shows.
In figures released by the Council of Mortgage Lenders
(CML), it was revealed that some 50,300 loans for the
purposes of purchasing a house were taken out over the
course of January. Such borrowing was indicated to be worth
a total of 7.8 billion pounds. The number of loans approved
was also shown to be down by 34 per cent from figures
recorded during the same month in 2007 and 19 per cent
lower than statistics witnessed in December 2006.
Research from the institution also revealed that buyers
took out an amount which is of a decreasing proportion to
their earnings. The typical first-time buyer borrowed 3.32
times their income in January, a fall from the 3.38
recorded in the previous month and down from 3.31 seen at
the beginning of 2007. Meanwhile, existing homeowners
borrowed an average of 2.97 times their income at the start
of this year. During December, however, this stood at 3.04.
Michael Coogan, director general of the CML, said: "The
wholesale funding markets remain largely closed and
mortgage funding still remains constrained. This is now
having a discernible impact on lending criteria and the
ability of first-time buyers to get into the housing
market. Tomorrow's Budget presents a perfect opportunity
for the government to do what it can to help first-time
buyers by raising the stamp duty threshold."
He added that there is unlikely to be "one silver bullet
solution to problems in the wholesale funding markets".
In addition, the council reported that fixed-rate products
were becoming decreasingly popular, with the number of
people taking out such UK loans in January down by 20
percentage points from six months beforehand. Trackers
mortgages, meanwhile, were shown to be favoured by a higher
number of consumers, with the CML stating this was due to
predictions that the Bank of England would choose to lower
the base rate of interest over the remainder of this year.
And following on from an interest rate cut, it possible
that Britons could make repayments on mortgages and loans
with greater ease - should money lenders choose to pass on
such reductions.
Remortgaging was indicated as increasingly dramatically
over the course of January - as 85,000 consumers chose to
initiate such a borrowing strategy. This figure represents
an increase of 43 per cent from the 59,000 recorded in
December.
Commenting on the CML figures, the Royal Institution of
Chartered Surveyors (Rics) reported that the credit crunch
is having a "meaningful impact on the availability of
finance for home purchases". Furthermore, Rics suggested
that those looking to take their first steps on the
property ladder are "very much under the cosh" - with
mortgage lending set to diminish further as the property
market weakens.
Those looking for an effective way to supplement their
finance in the weeks during a property purchase, a cheap
loan may prove to be of assistance. By getting this type of
loan it is possible that consumers can meet the various
expenses associated with buying a home such as stamp duty
and redecorating. A loan may also be of help to those in
the midst of the purchasing process. Last month, Lee
Tillcock, editor of Business Moneyfacts, reported that a
loan for bridging purposes can be of assistance to those in
the 'financial gap' between buying their new home and
selling an old property.
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Abbi Rouse is Editor in Chief for All About Loans. Our
visitors have access to cheap online loans of all types:
From home improvement loans to bad credit debt
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