A new trade organization, UK Finance, reports that housing starts are leveling off. They theorize that housing activity is a good predictor of economic activity as a whole, and expressed concern about consumer activity. Consumers are going to decrease spending in response to changes in the housing market, declining consumer confidence and growing inflation. Mortgage industry experts are concerned that first-time homebuyers will be the next to decrease, and fewer refinances will cause lenders to take a hit.
Key Takeaways:
- Housing market activity has reached a plateau as consumers face a period of “belt tightening”, according to a trade body.
- Figures from UK Finance show mortgage lending reached about £22.1 billion in June, taking the total for the second quarter of 2017 to around £60.3 billion. This was a 3% increase on the first quarter.
- Looking ahead, housing market activity is likely to reflect economic conditions – a deterioration would likely dampen first-time buyer numbers and homeowners remortgaging
“A period of belt-tightening now seems to be under way as inflation begins to erode consumer spending power, and consumer confidence weakens”