Fear of falling houses

17 March 2008 By Ian Campbell

UK mortgage lenders are less willing to lend and are raising sharply the average spread they charge borrowers. The gloomy implications for the housing market, consumer finances and UK growth are clear including, no doubt, to the Bank of England.

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The Council of Mortgage Lenders says 671,000 fixed rate mortgages mature in the first half of 2008. Of these, 527,000 are 2year deals.

According to CML, the number of loans for house purchase declined in January to 50,300, a 19% fall from 62,000 in December, and 34% lower than in January 2007. The value declined to £7.8 billion, a 17% fall from £9.4 billion in December and 31% lower than £11.2 billion in January 2007.

The Royal Institute of Chartered Surveyors has reported that only 4% of surveyors recorded rising house prices during the past three months and 57% said house prices were falling. The seasonally adjusted net balance was minus 64.1%, the worst since June 1990.

Citizens Advice in England and Wales reported today a 35% increase in mortgage arrears problems in the first two months of 2008 compared with the same period in 2007. A survey of 73% of all Citizens Advice Bureaux revealed they dealt with 215,000 new debt problems in the first two months of 2008 alone.

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