Mortgage famine could continue for years

A recent report has claimed that the continuing mortgage famine that has hit the UK since the onset of the global credit crunch last summer could continue for years to come. Whilst some lenders have been reducing the interest rates on their mortgages, which may have given some hope to potential buyers, one industry official has said that this does not mean that the problems are over, as there is still a huge problem when it comes to the supply of mortgage loans.

Alex Murray of national adviser network Thinc Group stated: ‘This is not the start of a new dawn. Massive supply problems remain.’ He added that until stability was restored to the wholesale mortgage market conditions would continue to get worse, and the shortage when it comes to mortgage supplies would continue. This would impact on the downward pressure on house prices and make it increasingly difficult for consumers to get their hands on affordable mortgages.

Another broker agreed, stating that whilst some lenders were starting to provide finance again it was only based on safe lending, where borrowers have a high deposit to put down and a fairly good credit report. He said: ‘Certain lenders appear to be jockeying again to expand their market, but only where very safe lending is concerned.’

The potential suspension of stamp duty in the meantime continues to impact on the level of housing sales, and one official said: ‘With the Chancellor’s confirmation that he is considering a temporary suspension of stamp duty, housing transactions will diminish further until he sets out his proposals. Who will want to commit to a property purchase now when it is probable that by waiting a few months they could save thousands of pounds?’