The Council of Mortgage Lenders’ gross lending figures for February, showing a decline of 7% on January to around £24bn, weren’t as bad as some had expected but are a good reflection of what’s happening in the mortgage market at present.
The stories about how much more difficult it is to get a mortgage and how nervous lenders are aren’t hype, they’re a hard fact. Increasingly, we’re seeing lenders look longer and harder at borrowers who only a year ago would have been given a loan at the drop of a hat.
It’s like the clocks have been turned back 15 years to a time when a mortgage wasn’t a gimme, but a very serious home loan – and which in fact may be no bad thing. But the danger is the vicious circle this toughening of mortgage criteria results in. As it becomes harder for people to take out mortgages, so the number of buyers dwindles, which, inevitably, will have a knock on effect on property prices and consumer confidence, further depressing spending and sentiment.
The minutes of this month’s Monetary Policy Committee meeting showed that seven members voted to maintain rates at 5.25%, while two were in favour of a quarter percent cut. Let’s hope for a big swing in April and a further rate reduction to give the mortgage and property markets – and general consumer sentiment – a much needed boost.