Mortgage Market In Slowdown For Lenders

by Stewart Douglas

Story link: Mortgage Market In Slowdown For Lenders

The UK housing market could be in for further turbulence according to figures released today, which reflected an 8% drop in mortgage lending activity over the course of November as the housing situation here continues to falter under wider economic pressures.

According to the data released today by the Council of Mortgage Lenders, total lending overall was down to £30 billion from £33 billion just one month previous, reflecting a strong decline in the amount of money lent out to consumer house buyers over that relatively short period.

The drop is the first such of its kind in over two years, reflecting the extent of the slowdown in the mortgage and housing markets over the last few months as the market is continued to be subject to the sub-prime sector fallout and the global credit crunch climate.

Meanwhile the Bank of England announced that only just under 90,000 mortgages were approved throughout the whole UK last month, again lower than levels seen for well over two years previous as a further sign that the housing market was in decline.

Much of the problem stems from the credit crunch, which has made banks far more wary of lending money and seen inter-bank lending rates skyrocket off the back of liquidity problems globally and a general lack of transparency in worldwide financial systems.

The decline in the housing market and the rate of mortgage activity is no doubt a blow for lenders across the country, who have been experiencing tightening conditions at any rate as a result of the credit crunch and the sub-prime collapse.

It remains to be seen whether lenders will be able to recover from the decline in mortgage lending and home buying overall into 2008, and whether they can continue to report a profit over the new year.