Where has the mortgage market liquidity gone?
This week we heard news that UK mortgage holders have repaid £6.2 billion worth of mortgage liabilities in August although many are now asking the question, where is this additional mortgage liquidity now?
If mortgages are being repaid at a higher rate than we have seen for some time then where are these additional funds which are being returned to UK mortgage providers. When you also consider the billions of pounds that the UK government and the Bank of England has ploughed into the UK money markets to support the mortgage industry there would appear to be only one winner in this particular situation, the UK banking arena.
After a period of relative instability the UK banking sector is now on a firm footing although much of this is thanks to support programs introduced using taxpayer money which has since disappeared into the UK financial sector black hole. If a return of £6.2 billion, further capital and ongoing support programs offered by the Bank of England are not enough to encourage further lending by UK mortgage providers then what will it take to turn the corner?
At this point in time it is difficult to see what will change the minds of UK mortgage providers and release more liquidity to the market.
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