Mortgage sector still experiencing difficulties
August 7, 2008
The mortgage sector in the UK is still experiencing immense difficulties, as it continues to reel from the damaging effects of the global credit crunch, which hit the nation last year and is still causing total chaos throughout the financial markets. Officials from the Council of Mortgage Lenders have said that whilst the government has taken action by injecting millions of pounds into the money markets and coming up with a £50 billion mortgage rescue plan the mortgage industry continues to suffer severe problems.
Last summer mortgage lending levels peaked, but late last summer the global credit crunch made its way to the UK from the United States. This caused chaos on the money markets, particularly with the mortgage markets, as it meant that lenders were struggling to get finance on the wholesale money markets, and with inter-bank lending becoming more difficult and expensive, many found that their mortgage operation funds were drying up. This resulted in the number of mortgages available being slashed by two thirds, and lenders bringing in far more stringent criteria as well as increasing costs such as mortgage arrangement fees, interest rates, and deposit requirements.
An official from the Council of Mortgage Lenders said: “The next few months will remain very weak for house purchase activity for the funding reasons which are now well rehearsed. We still await first signs of the Bank of England’s special liquidity scheme indirectly helping to ease the current logjam.” He indicated that the problems would be ongoing for some time to come, and this has had a severe impact on the sale of homes, with many homeowners finding that they are unable to sell due to many buyers being unable to get or afford a mortgage.
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