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Mortgage market has stepped back in time, says broker
26 March 2008 10:30
Last month's decrease in lending reflected a mortgage market returning to older trends, one broker has claimed, highlighting the need for a swift reduction in the base rate.
Latest figures from the Council of Mortgage Lenders indicated that an estimated £24 billion was granted to borrowers in February, which was down from £25.6 billion in the same month of 2007 and from £25.93 billion in January.
While Cobalt Capital's Andrew Montlake admitted that this fall was not as bad as some had feared, he said it underlined the fact that mortgage providers are now far less willing to lend to borrowers about whom they would have had few reservations only a year ago.
He noted a resemblance between the state of the market now and that of the early 1990s and warned of a vicious circle arising whereby tighter lending criteria lead to falling buyer numbers, resulting in further declines in both property prices and consumer sentiment.
Mr Montlake therefore called on the Bank of England's Monetary Policy Committee, which voted seven-to-two against a base rate cut earlier this month, to lower the rate in April and give the mortgage and property markets a badly needed boost.
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