Mortgage providers struggling to value UK houses
In a worrying development the Bank of England has revealed that a number of so-called house price chains have collapsed because mortgage providers are struggling to value property in the UK market. Such is the difference of opinion with regard to the short to medium term direction of the market that consensus valuations are proving very difficult to obtain.
If mortgage providers are unable to obtain trustworthy valuations then they will struggle to provide the mortgage facilities required. It could take just one potential transaction in a line of property exchanges to bring the whole chain down and effectively wipe out all transactions. This is something which the Bank of England is seeing more and more and it is causing significant concern in the mortgage lenders market.
Even though this particular issue will sort itself out in the weeks and months to come, when the direction of the UK property market becomes clearer, we could still see potential difficulties in the short term which could reduce mortgage lending in the UK. There is no doubt that mortgage funding is there, and liquidity has improved, but the criteria for many of the more attractive deals still remains out of the reach of the vast majority of people.
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