Lending in UK down – June 2009
The Council of Mortgage Lenders reported property loans were down by 2% from April to May. Lending was described as ‘subdued’ and said overall gross lending is down by 58% in comparison to May last year.
Ian Shepherdson, a UK and US economist told the Chartered Institute of Housing’s Annual Conference that repossessions are increasing swiftly from 100,000 and 120,000 per year by 2011. Repossession levels in 2008 stood at 40,000.
The unemployment rise is a major factor involved in steering repossessions up higher than they have ever been before and increasing consumer debt means home owners are really struggling to meet payments. Furthermore with interest rates predicted to rise in the near future this will contribute to the increase in repossessions.
Shepherdson also warned that the collapse of bank lending to the ailing construction industry will have a major impact. Investment by banks has dropped to virtually zero.
The factors are contributing to a huge decline in house building targets with some indicators suggesting a decline of 50% in the number of new houses in comparison to 2008.
The low numbers of deals going through suggests the market is still anemic, it suggests, and the outlook is gloomy, selling your property fast can be very difficult.
'While recent signs from the housing market have been more encouraging, we do not anticipate a significant recovery in activity in the coming months. Lending volumes appear to have stabilised at extremely low levels, but the weak labour market and lenders' limited access to funding will constrain activity for some time yet,' said CML economist Paul Samter.
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