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UK house price rise runs out of steam

The Council of Mortgage Lenders in the UK (CML) has this evening suggested that while there has been significant interest in UK property, limited access to mortgage finance appears set to cut this improvement short. Confirmation that mortgage lending fell again in May was something of a body blow to homeowners in the UK and perfectly illustrates the fact that while there appears to be demand for UK property the UK banking sector is still not willing to increase liquidity. What next?

There is only so far a recovery in house prices can go without an increase in mortgage finance liquidity - something the UK government has been working on for some time. The longer the situation continues the more people will fall into financial distress and we could see more and more sellers queueing up to dispose of their properties at any price. The situation is now critical because while there are seeds of a recovery firmly planted in the ground the water, which is liquidity in the mortgage market, is not forthcoming as yet.

Even though the Bank of England still has sufficient funding for its quantitative easing program in the short to medium term, a recent report suggested this was having a limited impact in the commercial market.

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