According to BBC online news on 1. 7. 10, lenders are warning that there is going to be a new squeeze on mortgage availability. Although, we have seen improvements recently in the mortgage market, it is feared that this will not last and lending is to get tougher, they say, based on reports from the Bank of England. It is anticipated that we will see a squeeze on mortgages over the next three months.
Shortage of funds is the reason for the anticipated tightening of loan availability. A balance of 11. 4 per cent of banks said they expected to lend less during the next three months, due to an anticipated tightening in the wholesale funding markets, according to the Bank of England’s Credit Conditions Survey.
There has been an increase of properties coming on to the market recently, during to factors such as the scrapping of Home Information Packs (HIPS) and the Elections. However, house price increases are now starting to stall. According to the mirror.co.uk on 1. 7. 10 house prices came to a halt last month after a year-long surge. The report goes on to say that figures from the Nationwide Building Society showed the value of the average home edged-up just 0. 1% to £170, 111.
If lending criteria toughens up then we will see the number of buyers drop away and a decrease in property prices. It is expected that there will be a double dip recession in the property market but one that will not be as hard hitting as before.