Steady rise in mortgage lending

Posted under General by Jermaine

Mortgage lenders have started approving more deals as they advanced loans of £18.7bn in October against £17.5bn in September.

However Council of Mortgage Lenders (CML) claimed that lending were still 44% less than in October last year.

CML warned that increase in lending is not going to improve demand for housing due to falling prices and worsening economic conditions in spite of Bank of England’s significant cuts in interest rates in last two months.

Difficulties faced by the wholesale money market are putting constraints on mortgage lending as the banks are unable to raise funds for lending to consumers.

According to CML’s Director General, consumer confidence was going down due to grim economic outlook, and recovery in lending was being hampered by fund shortages. He urged Government to release Crosby Review as Pre-Budget Report and make announcement of concrete steps which would encourage more lending.

Some experts suggested that mortgage lending may not now go further down. Recent survey by the Royal Institution of Chartered Surveyors revealed increase in enquiries from potential buyers. But it is also anticipated that this increase is unlikely to continue and would adversely get affected by the rising threat of unemployment in coming months.

Irrespective of improvements in lending and sales, experts are predicting that house prices would continue falling and could go down further by 20% in 2009.

More