According to the Council of Mortgage Lenders – Gross mortgage lending dropped in April by 19pc to £10.2 billion.
The drop in lending to the lowest it has been in 12-months has activated fears that house prices may fall, while the property market comes to a halt. Major mortgage lenders like Santander have already cut back on lending, as new companies are fighting to get into the market.
The CML’s lending amount was higher than the £10 billion reported in the same month in 2011, but remains to be lower than last year’s peak of £13.6 billion which was acquired in September.
Economist Howard Archer, of IHS Global Insight said that survey evidence along with the latest numbers prove the belief that the prices of houses will probably fall more in the following months. In particular, they predict house prices will fall by close to 3pc by the end of 2012.
CML’s chief economist, Bob Pannel says that developments in the Euro-zone are uncertain and can potentially undermine the UK’s economic conditions and prospects within their housing market.
Chief executive of SPF Private Clients (mortgage brokers), Mark Harris, says that the UK is far from sustaining a recovery in its housing market, and the euro-zone crisis is making the problem even bigger.
The nature of cross-border banking means that banks in the UK cannot stay immune to what’s going on in the euro-zone. Mortgage lenders are already indicating that they aren’t enthusiastic about lending monies and if the euro-zone crisis continues, getting funding will be even more difficult. Mortgage rates have already begun to go upwards, and this is expected to continue.