Mortgage lending in 2008 'to fall by a fifth' as housing market fails to rally
A rumoured imminent rally in the housing market has failed to materialise, as the latest round of bleak housing market data confirms, despite attempts by estate agents to inject a positive note.
Mortgage lending will contract by almost 20 per cent this year, reflecting the market uncertainty, falling house prices, and rising arrears, market analyst Datamonitor has warned. In the first six months of this year, gross lending amounted to just £149.5bn, a steep fall of almost 19 per cent from £178bn in the first half of 2007. Datamonitor predicts that lending will shrink to a total of around £294bn in gross lending in 2008, this steep rate of decline easing off to a further 3 per cent fall in 2009.
Total new consumer lending, including mortgages and consumer credit, will contract by almost 14 per cent in 2008 to £492.5bn, down from £569bn in 2007, the analyst predicts. "Lend-ers have had the opportunity to reprice their products higher and reap higher margins," said a spokes-person. "But consumers continue to be saddled with high levels of personal debt. With house prices expected to fall at least 10 per cent in 2008, with rising arrears, repossessions and inflation, the future of the UK lending markets looks bleak."
The latest figures from the National Association of Estate Agents (NAEA) reveal that the number of househunters dropped sharply in July, to an average of 192 per agent, down from 226 in June. The percentage of first-time buyers in the market has dropped by more than 1 per cent in just a month, to stand at 10.7 per cent.
However, Chris Brown, president of the NAEA, argued that the market is levelling out, reflected in, for example, the stable figures for number of sales agreed and number of viewings per property.