Mortgage lending levels still low for banks
January 11, 2008
According to a recent report the level of mortgage approvals amongst some of the UK’s major banks has steadies somewhat, with new approvals for November up by several hundred compared to October according to the British Bankers Association. However, despite this the lending levels for November are around 40% lower than they were in November of last year.
According to the British Bankers Association the housing market will continue to remain subdued in 2008 because of increased pressures when it comes to household finances. One official from the British Bankers’ Association stated: “Tighter household finances and uncertainty in the financial markets are driving consumer behaviour.”
He also stated: “Judging by the significantly lower number of mortgage approvals in October and November - partly resulting from lower demand, partly from tighter supply - the market is likely to continue slowing in the coming months.”
This is the view of many experts who have stated that the housing market is cooling and will continue to do so in the coming year, with lower levels of consumer interest, tighter credit conditions, and increased financial pressures.
One economist stated: “Housing market activity is now slowing markedly in the face of stretched affordability as well as the tightening lending practices resulting from the credit crunch. This ongoing evidence that the housing market is currently slowing markedly maintains pressure for another interest rate cut early in 2008.”
A number of interest rate cuts are expected for 2008, and some expect the first two rate cuts to happen in the first half of the year, with another in the last half of the year.
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