UK Housing Market Starts Year with Less than Attractive Figures
Mortgage lending continues to struggle due to restricted lending and overall consumer confidence. While many UK homeowners are turning to remortgaging into a fixed loan product, many others are playing a wait and see game to see what happens with interest rates.
According to the Council of Mortgage Lenders, gross lending for February went unchanged from the month prior. Further indication that mortgage lending is in quite a rut currently, and the rest of the year will be used to play catch up. Bob Pannell, of the CML, believes that the market will probably not improve throughout the year. He also thinks there are no fundamental reasons in sight to believe 2011 will be anything but a struggle to regain confidence in the market once again. The upcoming Budget does not seem to include anything to help the market either. More spending cuts will affect wages and unemployment, which will ultimately make waves in the housing market. The interest rates will remain the same, at least through the end of this month. The latest Bank of England meeting regarding the base rate, resulted in another thirty days of similar interest rates. The base rate, which is the determining factor for interest rates across the UK, remains at a historic low of 0.5%. Howard Archer, chief economist of IHS Global Insight, believes home prices will fall approximately 5% by the end of the year, in addition to the market struggling as a whole.