Banks in the UK are unlikely to step up mortgage lending in 2011, as a lack of funds and increased regulations restrain access to credit and concerns on the economy persist, according to Hometrack Ltd.
Mortgage lenders will probably approve only 1.2 million loans, the same as the number approved last year, said the London-based property researcher. This is less than half of the three million home loans issued during the property boom in 2007.
“Lending will not improve unless there is a dramatic upturn in both consumer confidence, which would boost the number of buyers, and confidence in the global financial markets, which would free up lenders to access funding,” said David Catt, Hometrack’s Chief Operating Officer. “Until then, home buyers must recognise that the current subdued lending market is the new norm.”
It said estimates showed that the number of home loan purchases this year would likely reach 575,000 (355,000 for re-mortgaging).
Many officials have warned that the government’s planned budget cut could affect economic recovery, while recent surveys suggest that economic growth may slow in Q4, as snow and freezing weather have disrupted travel.