Credit Crunch

Mortgage lending at all time low

It’s been a week of yet more bad news for UK property owners as it’s being reported that home sales are falling drastically, primarily because mortgage lending is down by 70%.

The figures are the result of a survey commissioned by the Royal Institution of Chartered Surveyors (RICS) and it showed that estate agents in England and Wales had sold an average of one house per fortnight, which is the lowest level of sales since the 1970s.

Nationwide, the UK’s biggest building society, warned that while its own market share was slipping, the entire mortgage lending market could fall by as much as 80% this year.

New mortgage lending by Nationwide dropped from over £3 billion to just £1 billion in the six months up to September and its share of the total mortgage market fell from 6.2% to 5.6%

Home sales have been in decline for over a year as banks and building societies have been reducing mortgage lending in order to protect their margins during the credit crunch. Potential borrowers who have only a small deposit or who have a less than perfect credit history are now struggling to get a mortgage.

Many homebuyers are instead buying property at auction in the hope of getting a bargain property, many of which have been repossessed by a bank. The number of UK repossessions is also expected to rise by 50% this year to over 45,000.