As the financial crisis worsens and the UK edges closer to a recession, UK banks have said they will be curtailing their lending to consumers and companies even further in the coming quarter.
United Kingdom of Great Britain & N. Ireland (Press Release) July 4, 2008 --
As the financial crisis worsens and the UK edges closer to a recession, UK banks have said they will be curtailing their lending to consumers and companies even further in the coming quarter.
A recent survey carried out by the Bank of England shows that the decision by financial institutions to curb lending further was influenced by the gloomy outlook for the housing market, their decreased appetite for risk, as well as continuing tightness in wholesale funding conditions, all of which have contributed to the reduced availability of credit.
Although the central bank lowered the interest rate three times since December, commercial banks have not passed on the rate cuts to consumers and businesses. The reluctance of banks to lend has exacerbated the slowdown of the housing market, and UK mortgage approvals fell to their lowest level in May for at least nine years. Only 42,000 home loans were granted by banks that month, compared to 58,000 in April. The situation in the mortgage market has been likened to ‘almost a famine’ by the bank’s former policy maker Stephen Nickell.
The price of an average home stood at £172,415, a decrease of 6.3% from a year earlier, representing the biggest drop in 16 years according to Nationwide.
With lending being curtailed even further, and mortgages being harder to obtain than ever before, there are no signs that the mortgage market or housing market will improve, or even stabilize, in the near future. Indeed, in the broader picture, analysts are predicting that a recession before the end of the year is likely.
“The only category of consumer in the housing market that might benefit from the current conditions are buyers who have a sizable deposit and can take advantage of lower house prices,” commented Lawrence Smith of Decision Homebuyers. “With banks tightening lending even more in the next few months, the woes of the housing market are set to get worse as well.”
For press enquiries, please contact Phil Rendall on 020 7099 9026
Email: phil@dhbuyers.co.uk
Web: www.decisionhomebuyers.co.uk
News provided by Decision Homebuyers, a leading UK property company offering a quick and simple solution for selling your home, no matter what the condition.
Decision Homebuyers carries out daily surveys of the national media to provide up-to-date news and commentary on the UK property market.
A recent survey carried out by the Bank of England shows that the decision by financial institutions to curb lending further was influenced by the gloomy outlook for the housing market, their decreased appetite for risk, as well as continuing tightness in wholesale funding conditions, all of which have contributed to the reduced availability of credit.
Although the central bank lowered the interest rate three times since December, commercial banks have not passed on the rate cuts to consumers and businesses. The reluctance of banks to lend has exacerbated the slowdown of the housing market, and UK mortgage approvals fell to their lowest level in May for at least nine years. Only 42,000 home loans were granted by banks that month, compared to 58,000 in April. The situation in the mortgage market has been likened to ‘almost a famine’ by the bank’s former policy maker Stephen Nickell.
The price of an average home stood at £172,415, a decrease of 6.3% from a year earlier, representing the biggest drop in 16 years according to Nationwide.
With lending being curtailed even further, and mortgages being harder to obtain than ever before, there are no signs that the mortgage market or housing market will improve, or even stabilize, in the near future. Indeed, in the broader picture, analysts are predicting that a recession before the end of the year is likely.
“The only category of consumer in the housing market that might benefit from the current conditions are buyers who have a sizable deposit and can take advantage of lower house prices,” commented Lawrence Smith of Decision Homebuyers. “With banks tightening lending even more in the next few months, the woes of the housing market are set to get worse as well.”
For press enquiries, please contact Phil Rendall on 020 7099 9026
Email: phil@dhbuyers.co.uk
Web: www.decisionhomebuyers.co.uk
News provided by Decision Homebuyers, a leading UK property company offering a quick and simple solution for selling your home, no matter what the condition.
Decision Homebuyers carries out daily surveys of the national media to provide up-to-date news and commentary on the UK property market.
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