Recent figures released for November of last year have shown that whilst mortgage approval levels amongst banks have become steadier the level of lending for mortgages remains low amongst banks in the UK. The figures show that mortgage approvals in November were up by several hundred compared to mortgage approvals for October amongst UK banks, but there was still a 40% drop in mortgage lending levels compared to November of 2006.
Many experts have predicted that the housing market in the UK is slowing down, and this is yet another sign of a more subdued housing market. Tighter credit conditions, increased strain on household finances, and lower demand in many areas have all affected the housing market.
One industry professional stated: “Judging by the significantly lower number of mortgage approvals in October and November - partly resulting from lower demand, partly from tighter supply - the market is likely to continue slowing in the coming months.”
According to one economist: “Housing market activity is now slowing markedly in the face of stretched affordability as well as the tightening lending practices resulting from the credit crunch. This ongoing evidence that the housing market is currently slowing markedly maintains pressure for another interest rate cut early in 2008.”
Many analysts and economists have predicted that there will be a further two or three interest rate cuts over the course of this year, with many expecting the first two cuts by the summer and another in the third or final quarter of the year. This could help to increase both demand and affordability in the housing sector, which could go some way towards improving conditions in this sector.
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