The December period showed a decline in mortgage lending, recording a 3 year low.
According to the Bank of England, a 6% fall in new mortgages, resulted in a final amount of mortgages in December of 61,039, the lowest figures since January 2015. In addition, remortgages fell even further, falling by 14% to 46,475.
According a report, it has become necessary for some sellers in the London area to reduce their asking price by as much as 10% in order to secure the sale (Phillip Inman, Guardian , January 2018).
The need to reduce prices in aid of sales was also felt in Oxford, Cambridge and Aberdeen. House price growth in the UK as a whole held up however.
According to Howard Archer of the EY Item club, the December reduction indicates that housing market activity was being affected by the November's interest rate rise in addition to inflationary and Brexit pressures:
“We think that the labour market has continued to tighten, especially the wages of people who are shifting job. So there is the prospect of real income growth later this year...”
£1.67 Million of the UK's home mortgages are interest only, with 26% of these loans held by lower income borrowers, who would be especially vulnerable to any rate rises, potentially resulting in the loss of their homes.
Regulators view the interest-only mortgage market as a "ticking time bomb" due to it's role in the 2007-2009 financial crisis.
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UK mortgage lending falls to lowest level since January 2015