Mortgage lending has fallen, new research shows.
In figures released by the Council of Mortgage Lenders (CML), it was revealed that some 50,300 loans for the purposes of purchasing a house were taken out over the course of January. Such borrowing was indicated to be worth a total of 7.8 billion pounds. The number of loans approved was also shown to be down by 34 per cent from figures recorded during the same month in 2007 and 19 per cent lower than statistics witnessed in December 2006.
Research from the institution also revealed that buyers took out an amount which is of a decreasing proportion to their earnings. The typical first-time buyer borrowed 3.32 times their income in January, a fall from the 3.38 recorded in the previous month and down from 3.31 seen at the beginning of 2007. Meanwhile, existing homeowners borrowed an average of 2.97 times their income at the start of this year. During December, however, this stood at 3.04.
Michael Coogan, director general of the CML, said: "The wholesale funding markets remain largely closed and mortgage funding still remains constrained. This is now having a discernible impact on lending criteria and the ability of first-time buyers to get into the housing market. Tomorrow's Budget presents a perfect opportunity for the government to do what it can to help first-time buyers by raising the stamp duty threshold."
He added that there is unlikely to be "one silver bullet solution to problems in the wholesale funding markets".
In addition, the council reported that fixed-rate products were becoming decreasingly popular, with the number of people taking out such UK loans in January down by 20 percentage points from six months beforehand. Trackers mortgages, meanwhile, were shown to be favoured by a higher number of consumers, with the CML stating this was due to predictions that the Bank of England would choose to lower the base rate of interest over the remainder of this year.
And following on from an interest rate cut, it possible that Britons could make repayments on mortgages and loans with greater ease - should money lenders choose to pass on such reductions.
Remortgaging was indicated as increasingly dramatically over the course of January - as 85,000 consumers chose to initiate such a borrowing strategy. This figure represents an increase of 43 per cent from the 59,000 recorded in December.
Commenting on the CML figures, the Royal Institution of Chartered Surveyors (Rics) reported that the credit crunch is having a "meaningful impact on the availability of finance for home purchases". Furthermore, Rics suggested that those looking to take their first steps on the property ladder are "very much under the cosh" - with mortgage lending set to diminish further as the property market weakens.
Those looking for an effective way to supplement their finance in the weeks during a property purchase, a cheap loan may prove to be of assistance. By getting this type of loan it is possible that consumers can meet the various expenses associated with buying a home such as stamp duty and redecorating. A loan may also be of help to those in the midst of the purchasing process. Last month, Lee Tillcock, editor of Business Moneyfacts, reported that a loan for bridging purposes can be of assistance to those in the 'financial gap' between buying their new home and selling an old property.
