Finally, A Reality Check For The Housing Market?
After months and months of successive increases in house prices, it seems that many of the UK’s mainstream mortgage lenders are finally taking stock of what could be a potentially dangerous stage of the economic cycle. Mortgage approval figures for April fell to the lowest level for 12 months with many market observers sensing a sea change in the attitude of lenders.
While April still saw 107,000 new mortgages approved, this was down on the previous month’s figure of 111,000 and continued a run of successive falls in each of the last three months. Even though mortgage lending for the month of April hit £9 billion, this was much less than expected, with consumer debt rising by a net £498 - again much less that anticipated by the markets.
It seems that the recent strategy of increasing interest rates seems to be finally hitting home with consumers, but there may still be further pain before rates “top outâ€. Even after the recent rise in interest rates there are still a number of areas in the UK which are experiencing pricing pressure, due in the main to a shortage of quality properties.
These are the areas which offer most risk for home buyers, with these markets likely to turn very quickly and prices fall sharply when buyers finally do withdraw.
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