Mortgage lending way down Thursday, 19th February 2009

The state of the housing market is still dire as mortgage lending fell to a record low in January.

The figures are down 8.4 per cent from £13.5 billion in December and down 52.1 per cent year on year according to figures from the Council of Mortgage Lenders.

And the situation is unlikely to improve soon.

Mortgage lending activity continues to be very weak and people are searching eagerly for some signs of recovery.But it is unrealistic to expect a meaningful revival in lending in coming months.

Some estate agents report that interest is coming from cash buyers who do not need mortgages. And while some cash buyers scent rich pickings in property first-timers are being left behind by bargain-hunters
Separate surveys have shown a rise in buyer inquiries as bargain-hunters look for plum properties at rock-bottom prices, but analysts said it was unlikely that this would be enough to turn the tide.

Many people are likely to be looking at houses pretty casually and will probably be very cautious about committing to buying a house in the current economic environment. Consequently, only a major bargain is likely to tempt them into actually buying a house.

The lack of activity in the housing market has dragged prices down by 20 per cent since the market peaked in Autumn 2007, but economists expect prices to continue to fall.