Nice Loans.co.uk > News > Home Loans Low

Dramatic drop in home loans

Pressure to reduce interest rates even further and provide cheaper loans is being applied as new low figures were announced for home loans in November.

Reporting on business completed by the high street banks, the British Bankers ASsociation announced that mortgage loans in November were over 40% lower than for the same period last year.

Total lending in November amounted to £1 billion less than the average provided in each of the past six months.

Suggestions are that the huge drop in lending has been caused by market uncertainty about the future of UK house prices, with many buyers feeling wary about completing a purchase at the potential peak of the market. There is still a lot of uncertainty about the short-term future of house prices, but one thing is for sure, the 10% growth rates we have become used to over recent years have stopped.

If it wasn't for the current roll-out of Home Information Packs, which some people are suggesting is contributing to the drop in sales volume, we would be fairly sure the property market slowdown is being caused by the global credit crunch. It will be interesting to see how much the reduction of loan interest rates by the Bank of England continues and helps ease the fall.

On the back of these figures and the recently revealed minutes of the latest BofE MPC committee meeting, where members voted unanimously for a cut in interest rates, observers are now expecting a further interest rate cut early in the new year. Loans are set to become cheaper but whether it will help property prices remains to be seen.

<<< Return to news page | Request a cheap loan quote >>>