A report published has revealed that the mortgage market in the UK has severely declined in August.
LONDON, ENGLAND, September 21, 2012 /24-7PressRelease/ -- The e.surve mortgage monitor report showed that mortgages fell by 8 per cent to over 48,000 loans compared to the same period in 2011. It also shows that the slump is the third worst August in nearly twenty years as previous lending levels had also been low in August 2008 and August 2010. The fall in mortgage lending is also the third consecutive monthly decrease on an annual basis and August showed the year-on-year largest decrease in 15 months.
The borrowers who are the most affected are those that have less than 15 per cent deposit amount on the full value of a property for sale and therefore will require a high loan-to-value mortgage in terms of mortgage lending. First-time buyers who want to buy property have been deeply affected by the restriction of mortgage lending and borrowers with lower deposit amounts to put down on a property are unable to secure a mortgage readily.
Because of the increased squeeze on mortgage lending by banks and building societies they are only lending to borrowers on low loan-to-value mortgages and with deposits of more than 15 per cent.
High loan-to-value lending fell by 10 per cent compared to August 2011 and mortgage lending criteria is now further restricted to lower risk to the banks because of challenging credit conditions in the financial markets. According to the report, funding costs for lenders have increased by 35 per cent since January 2012 and they are less willing to take risks by offering high-to-value loans to borrowers with small deposits.
A lack of confidence in the UK Government's economic growth plan and the belief that the economic climate will remain stagnant for the foreseeable future has also affected the level of risk that mortgage lenders are willing to expose themselves to. It is also thought that the London 2012 Olympics, poor summer weather and the holiday period have affected the volume of mortgages being taken out.
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