Mortgage lending is restricted to those that can qualify under strict lending criteria and few would be buyers are finding it possible to gain approval.  This has put a strain on the housing market as both those looking to buy and those looking to remortgage are being put under a microscope.  There is no argument that no one wants to travel down the road that was created by the last credit crisis, but lenders are perhaps being too strict with lending. 

According to the British Bankers’ Association there were slightly over 30,000 new purchase mortgages approved in April.  This figure is down by 5,000 approvals from the same month last year and far below what is still being considered a healthy market level of 80,000 seen back in 2006.  This lack of new home purchases is putting the housing market on a scale out of balance with the number of homes available for purchase.  For many months now supply has far out-weighed demand from buyers. 

The current state of the housing market has not only created a financial strain on sellers and builders, but homeowners not wanting to enter the market are seeing equity levels go down as house prices decline.  House prices have declined in all areas outside of London and nearby areas.  The current house price now stands at £163,083 according to the Land Registry’s latest figures.  Despite low interest rates and lower house prices the level of buyers is low.

Chief executive of Marsh & Parsons remarked, “Mortgage lending is still a long way from where it needs to be. No one wants a return to the irresponsible lending practices seen before the credit crisis, but lenders must do more to help those looking to buy their first home. The average £25,000 deposit required is prohibitive for thousands of would-be buyers.”