Tue 24 Jun 2008
House sales and lending levels plummet
The volume of house sales plunged 37% in May, compared with the corresponding month in 2007, mainly due to a lack of mortgage finance, according to stamp duty registration figures from HM Revenue & Customs.Fresh figures from the British Banker's Association (BBA) showed 27,968 new mortgages were approved for new home purchases in May 2008, 20% lower than the previous month, and 56% fewer than in May 2007.
The cost of borrowing has also increased, with the average two-year fixed rate now standing at 7.02%, according to Moneyfacts.co.uk. The average fixed rate in June 2007 was 5.62%, according to figures from the Council of Mortgage Lenders.
Howard Archer, chief UK economist at analysts Global Insight, commented: “The BBA data graphically highlight that housing market activity is currently being throttled by stretched affordability and tight lending conditions.”
Darren Cook of Moneyfacts said: “ As the rates on offer increase, so does the relative risk. More and more borrowers are likely to find the increased repayment too much to bear.
“These are continuingly worrying times for anyone coming to the end of their current mortgage deal. However, it seems not all is lost as there could be some light at the end of the tunnel for borrowers. Today, Swap rates have decreased from the 6.52% high last week, by 0.16% to 6.36%. We hope that this recent downturn is not short lived and trust that lenders will play a fair game by reflecting.
Posted by Marc Da-Silva
in British Bankers Association, Darren Cook, Howard Archer, News on Tue 24 Jun 2008
Have your say and comment on this article