Mortgage lending still under pressure
The Council of Mortgage Lenders (CML) has today revealed that new home loans increased by 7% in May to £11.3 billion. While the 7% increase on the April figure is obviously a move in the right direction it is still only 10% higher than May 2009 which perfectly illustrates the still subdued level of mortgage liquidity and mortgage agreements in the UK. So what next?
The CML is growing more and more concerned about the potential impact of higher taxes and public sector budget cuts in the weeks and months ahead. There is no doubt that these will have an impact on the overall UK economy and reduce the level of liquidity available for those looking to buy property in UK. As a consequence we could see the number of houses for sale increase and the number of potential buyers reduced, placing pressure on prices.
Despite signs of increased competition in the UK mortgage market it seems we have not yet reached that critical point at which buyers are happy to compete for properties and are confident about the UK economy in the medium to longer term. Until we reach this "tipping point" there is unlikely to be a significant increase in UK property prices and indeed some experts believe that prices will "soften" in the latter part of 2010.
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