Loan Articles

Recently released figures have shown that whilst lending levels in December increased slightly, house prices have continued to fall. Officials reported that house prices dropped for a sixteenth month in a row for the month of January, with a further 1 percent drop in property values. Over the past twelve months house prices are said to have fallen by around 9.4 percent according to Hometrack, having already fallen for a number of months previously as well.

One economist from Global Insight commented on the increase in mortgage lending for the month of December, stating: ‘Mortgage approvals were still at exceptionally low levels by historical norms in December, so the best that can really be said is that activity may be stabilising at an extremely muted level. To be honest, mortgage approvals were so low in November that there had to be a rise in December.’

The change in activity with both borrowers and lenders has been put down to plummeting interest rates by some officials, with the base interest rate having fallen from 5 percent in October to just 1 percent. Whilst the base rate was not as low as it is now in December, it had fallen several times in as many months, and was at the lowest that it had been for some time.

Figures have also shown that there was a drop of around 23 percent in total mortgage lending last year by major High Street banks compared to the year before, with the major lenders advancing £170 billion over the course of the year.