Will mortgage changes drag the housing market lower?
Since the UK authorities stepped forward with a number of proposed changes for the UK mortgage market there has been much debate as to the overall impact this will have on the housing market. Some experts believe that up to one in five potential mortgage applications, and remortgage applications, could be effectively dead in the water leaving 2 million borrowers with no source for mortgage finance. Is this really true?
There is no doubt that the tightening of mortgage regulations by the authorities will have a significant short-term impact on the UK mortgage market although as we have seen in the past, the mortgage market will in due course find alternative means to support those affected. We mustn't forget that we are currently in the throes of a very difficult economic climate and the government's aversion to risk is probably at an all-time high. As and when the economy picks up we will see this risk aversion reduce and indeed many believe we will eventually return to the "days of boom and bust".
However, recent government changes do prompt the question as to why it takes a disaster for action to be taken and why similar moves could not have been instigated while the market was still relatively buoyant - something which may well have allowed the worldwide economy to avert such a damaging downturn.
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