Mortgage lending in Britain has fallen to its lowest level in almost a decade, after lending fell 5% in 2010.
Mortgages advanced fell to £136.3billion last year, down from £143.3billion in 2009.
Mortgage levels now sit at just a third of that in 2007, and have fallen for three consecutive years. With interest rates currently at an all time low, logic would suggest that mortgages are more affordable now than ever before, but the Council of Mortgage Lenders expect that interest rates will increase sooner rather than later.
December’s bad weather saw mortgage lending drop 6% on November, with just £11billion advanced during the month.
Whilst people without mortgages struggle to get them, those who currently have mortgages could be in for more problems if the interest rates do increase. The number of home repossessions is expected to increase along with rises in interest rates, although some economists don’t fell we will see much of an effect until rates increase above 1%.
First time buyers have also struggled, with over 100,000 young people without help from their parents getting turned down last year.
With extortionate rates for first time buyers and massive deposit demands, is it any surprise that many are turning to rental properties as the answer.
If mortgages continue to be rationed, house prices are expected to continue falling, although a revival in the mortgage market should see stabilization, and even a small increase in house prices by the end of 2011.