Surge in lending unlikely as jobless figures increase

Rising unemployment will continue to stifle mortgage lenders’ appetite to lend, says Paul Hunt, managing director at Phoebus Software.

Figures out last week revealed the number of unemployed people increased by 44,000 in the last three months of 2010 hitting 2.49 million, a jobless rate of 7.9%.

Unemployment for those aged 16 to 24 rose by 1.5% on the quarter to 20.5%, the highest figure since comparable records began in 1992.

The number of people claiming Jobseeker’s Allowance increased by 2,400 between December 2010 and January 2011 to reach 1.46 million.

Hunt says nobody could blame mortgage lenders for battening down the hatches.

He says: “If the decreases in out-put seen outside the manufacturing sector were largely due to a snowy December, it could be that unem-ployment might turn the corner by the end of the year.

“What seems certain, however, is that this lingering uncertainty means mortgage finance will rem-ain hard to come by during the coming months. Unfortunately, a surge in mortgage activity still looks some way off.”