According to experts, “Mortgage approvals for UK properties dropped more than usual in December because of their lowest since March 2009 when UK was in the middle of a slump and could drag down the real estate market”.
The Bank of England says that the mortgage approvals summed 42,563 in December, down from 47,287 in November and are now running at less than half their long run average, telling that further home rates falls may be to come.
In December, net lending reduced by £298 million as homeowners repaid more than what they borrowed, only this has happened the third time since records began in year 1993. The Council of Mortgage Lenders has forecasted that net lending will fall even further to £6 billion this year.
Howard Archer, chief UK economist at IHS Global Insight said, ‘Even allowing for the fact that the ruthless weather probable hit mortgage activity in December, the Bank data indicate to a housing market fixed in the doldrums. We preserve that house rates will drop by around 10 percent from their peak 2010 levels by the end of year 2011.’
Economist at Ernst & Young, Nida Ali, also thinks that the low levels of lending will influence badly on the property market. ‘The level of miserable demand replicated by low mortgage approvals says that house rates will persist declining well into year 2011,’ said Ali.
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