The mortgage market began to come back to life in August according to lenders, with 52,000 home loans given out, 7% more than were given out in July. The Council of Mortgage Lenders (CML) also revealed figures showing an increase in remortgaging as well.
However, a separate survey showed that the UK and European economy concerns were bringing confidence levels down for the housing market. The Royal Institution of Chartered Surveyors (RICS) reported that not as many homeowners were putting properties up for sale as they lacked the confidence to do so.
With lenders still careful about who they lend money to, all loans, including mortgages have become more difficult to get, with lenders less flexible or accommodating of new borrowers—or rather new loans. Many first-time buyers need larger and larger deposits in order to get a mortgage, and with costs of renting increasing due to rising demand for accommodation, many are struggling to make the cut.
Many borrowers who have perfectly reasonable proposals are being turned down, with people confused, annoyed, and looking elsewhere. The amount of people in debt from quick fix loan solutions has risen in the past few months, according to the Citizens Advice Bureau, which is calling for better regulation saying it is too easy to get that credit.
However, Consumer Minister Ed Davey says that this could push people into using illegal loan sharks. With payday loans, debts can work out cheaper than unauthorized overdrafts or credit card charges, as long as the loan is repaid promptly on the next payday. However, if they are not repaid quickly, some have interest rates of 4,000% and mean that debts increase extremely quickly.
The government is researching this situation, but is unsure if a cap on the amount payday loan companies can charge for interest would be the way to go. Mortgages will continue to be difficult to obtain, especially as house prices continue to remain the same and those who wish to sell get less than they paid in many cases, prompting people to avoid selling their home if they can, at least for the time being.