Thursday, Feb 12, 2009
"slump in lending and sales has been directly responsible for the sudden collapse of house prices"
BBC: Mortgage lending at 34-year low
The number of mortgages lent to house buyers fell last year to its lowest level since 1974, the Council of Mortgage Lenders (CML) has said. There were just 516,000 mortgages granted to house buyers, down 49% from the level seen in 2007. The squeeze on mortgage funds has seen widespread rationing by lenders, which meant that first-time buyers had to put down an average deposit of 22%. The CML believes that lending is likely to fall even further this year.
Posted by jack c @ 10:57 AM (578 views) Add Comment
10 Comments
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1. Loaded And Waiting said...
The premise that lack of mortgage lending has directly led to HPC is, of course, complete tosh confusing cause and effect. The reason the banks won't lend is because they quite like getting their money back, and won't do if their only security is an overpriced, depreciating box. Personally, I'd love to see the banks loosen their lending criteria, just to expose the myth that prices would still be going up if only it wasn't for those wicked bankers....
2. timmy t said...
"The slump in lending and sales has been directly responsible for the sudden collapse of house prices seen since the credit crunch started in the summer of 2007."
When will these people understand that these events are a cycle. Yes, the collapse in house prices has been caused by the slump in lending, but lets not forget that the slump in lending was caused by house prices being too high. The only reason lending has gone off a cliff rather than gently cooling is because house prices became a bubble and that bubble burst. And the reason lending is still declining and will do for the rest of this year at least is because house prices are still too high. Let's not try to make it more complicated than it is, and for God's sake stop trying to get lending going again. Let the market work it out.
3. justwatching said...
Bollix
4. Mr G said...
Well I never!!
5. shining wit said...
6. rm96696 said...
The article states that credit rationing has resulted in first time buyers having to put down a 22% average deposit instead of 10%. What do they expect? 10% is insane given that house prices can go down a lot as well as up (something few people seem to have taken in consideration until recently). It was the sudden realization that house prices can go down as well as up that is responsible for the "credit crunch" (which is simply a return to moderately sensible lending practices). I think it is about time that the press, public and government realize that 100% ( or 90%) mortgages are not normal and, indeed, are the cause of the collapse of the banking system.
7. luckyjim said...
I think 90% mortgages are fine in a normal market - by normal I mean house prices rising in line with earmings but no more than that. A 90% mortgage represents a risk to the bank but this should be reflected in the rate.
One of the things that was wrong with the market before was that it didn't seem to matter how big your deposit was. If you were remorgaging with a very low LTV you still paid the same rate as a FTB borrowing to the hilt. In fact, many of the best deals were only available to FTBs. This would be like car insurance firms offering the lowest premiums to newly qualified drivers.
So 90% mortgages will return but massively discounted rates probably won't. no more boom and bust. Honest.
8. luckyjim said...
9. luckyjim said...
10. shining wit said...
luckyjim....
At least beeny hill had a smash record.........as opposed to a record crash !!