More anxiety is brewing about a possible housing collapse, and recent data from the British Banking Association only confirmed those fears. The BBA announced that less than 30,000 loans actually went through mortgage approval in November. October was slightly higher at 30,698, but still not even in the ballpark of where it needs to be.
Ask any housing analyst about 2011, and they all agree the UK housing market is in for a struggle. As fewer loans are approved for a variety of reasons, homes continue to sit and gather dust. This is not only critical for those looking to move from one location to another, but first-time buyers continue to get shut out from the 1st step on the property ladder.
The BBA figures include lending feedback of all 5 major high street banks. Combined, they lent less than 1.5 billion pounds, which is the lowest since 1999.
Howard Archer, head economist of IHS Global Insight, commented on the meaning of the latest data released by the BBA, saying: “The BBA data point to the housing market ending 2010 very much on the back foot, where we expect it will remain for much of 2011. Activity remains stuck in the doldrums, which seems highly likely to maintain downward pressure on prices. Critical to the development of house prices over the coming months will be the amount of houses coming
onto the market, mortgage availability, and how well the economy and jobs hold up as the fiscal squeeze increasingly kicks in.”
Homeowners across the UK concentrated on paying off credit card and personal loan balances last month. Many analysts feel this is due to the looming base rate hike, which will take place in early 2011. It is possible some monthly mortgage payments could go up by 150 pounds, or more, by the end of 2011 according to some estimates.
Archer discussed the repayment of more personal debt in November, saying: “The further net repayment in consumer credit in November indicates that consumer appetite for taking on new borrowing remains limited while there is an ongoing desire of many consumers to reduce their debt.”
Also in November, banks were more liberal when it came to lending to businesses. Commercial lending increased by an estimated 500 million pounds.
Archer remarked on the slight increase in net lending, saying: “The marginal rise in net lending is a move in the right direction. However, it does not materially ease concerns that on-going tight credit conditions are still a significant handicap to economic activity, particularly for smaller companies.”
The market has reached levels not seen in many years. For example, in 1997 mortgage approvals were at a robust 60,000 per month. Last month, the total was less than half that.
It is not certain what figure, or figures amount to an official collapse of the market. The only thing to expect is that 2011 will bring with it a renewed faith in the UK government, and a staunch resiliency among the people.
