The Bank of England has warned that house prices are likely to remain stable or even decline in 2011 amongst continued concerns about the lack of access to mortgage finance. The lowest September mortgage lending total since 2000 did little to assuage concerns about the fragile state of the UK housing market.
Property prices continue to stagnate
The Bank of England published its Trends in Lending report this week and stated that lenders expect house prices to ‘remain little changed or to decline slightly in 2011’. The Bank also reported that mortgage lending had been lower than anticipated over recent months due to worries about Government spending cuts and continuing economic uncertainty.
The Daily Telegraph reports that ‘lenders do not expect a significant improvement in the number of mortgages approved for those buying a new home before the end of the year, with approvals to fall or remain broadly unchanged’.
Mortgage lending dropped to a 10-year low last month, extinguishing any sign of a traditional post summer bounce in mortgage activity.
The Bank of England themselves recently warned that lenders had ‘tightened credit scoring criteria’ and were expect to tighten them even further as they adopted a more ‘cautious approach’.