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Mortgage lending slump
Thursday, 12th March 2009
In January as buyers were forced to come up with record deposits to secure a loan, mortgage lending slumped dramatically
Lending criteria tightened further over the month in response to worsening market conditions,despithe the efforts of Government to pursuade lenders to ease the criteria.
There were only 8,900 loans to first-time buyers, who on average raised a 24 per cent deposit for their home – the largest amount on record.
There are still mortgages on the market available at 90 per cent,but industry experts do not believe that many buyers are actually accepted on these rates.
The current withdrawal of many specialist, small and foreign lenders from new lending has created a huge gap in the capacity to fund mortgages to match consumer demand and this is continuing in 2009.
Government schemes to restore the flow of funds are primarily focused on a few large banks and recent lending commitments by a few lenders cannot fill the gap overnight although it is hoped that we see more funds flowing into mortgage activity later in the year.
Those who can get access to credit are reaping the benefits of low interest rates, however.
A poll of chartered surveyors this week showed increasing interest in the housing markets but record sales lows.
The Royal Institute of Chartered Surveyors (Rics) blamed a lack of available finance for frustrating potential buyers from entering the market.
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