Mortgage and borrowing predictions for 2009
I used to work as a mortgage broker until the credit crunch put me out of business, and I often wonder how long the mortgage / credit markets will take to get back to “normal”, or something approaching what they were like pre-credit crunch. I suspect it will be many years before they get back to doing a similar volume of business, but I suspect the quality of business will never return to what it was like before - dreadful!
John Varney of Barclays Bank seems to agree with me, according to an article on the BBC News website, in which he predicts it will be upto two years before lenders resume lending at rates seen prior to the credit crunch.
According to the Bank of England, the mortgage market is still not operating correctly, with banks still refusing to lend to each other. This could prompt further aid from the government, perhaps even setting up a govt owned bank that would hold all the bad debt, in an effort to get banks lending to trust each other again.
There was further bad news reported on the Council of Mortgage Lenders website, where the latest statistics showed a 51% fall in gross lending in November 2008 against the previous years figures. This is quite bad considering that November 2007 was three months into the credit crunch and therefore these figures would most likely have been down on the previous years also.
The CML also predict that the value of UK mortgages taken out in 2009 will be around £145 billion, down from £363 billion in 2007. That’s less than 50% of lending amounts at the peak, which really gives an insight into the scale of the problems facing the UK borrowers.
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