The UK housing market is suffering from a dual menace, claims the BBA...

In light of the fact that mortgage lending has slowed by a huge amount over the last year, the British Banker’s Association Statistics Director, David Dooks, commented “The UK housing market is going through a two-way squeeze.

“Banks are finding it hard to raise funds on the financial markets because of the so-called credit crunch. With less money to lend to home buyers they have been tightening their lending criteria, making it more expensive for borrowers to take out a loan and move, or buy their first home.

”Meanwhile the rapidly rising house prices of the past few years have driven many would-be home owners out of the market, cutting the demand for loans”.

Mortgage lending down

New figures from the BBA reveal that bank mortgage lending to people who are moving home is still down by a third on the same time a year ago. The figures confirm the continuing downturn in the property market, claims the BBA. 

Banks lent 43,870 mortgages to home movers in February, slightly more than in January, but 33% down on last year. People who do not move, but change their mortgages to more favourable deals, now account for nearly half of all new mortgages granted by banks.

Mr Dooks continued: "In an environment of tightening lending criteria, re-mortgaging, either to fix, re-fix, or reduce borrowing costs, has been a clear influence on mortgage data in the first two months of this year, resulting in mainstream lenders picking up market share," said the

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors noted: "Buyer enquiries have slipped back to the lows seen in the wake of the Northern Rock crisis and this trend is likely to persist through the spring”.