Will the mortgage market ease next year?

Over recent months there have been mixed reports and opinions with regards to whether the mortgage market in the UK is likely to ease up next year, and whether people will stand a greater chance of being able to get a mortgage having experienced difficulties for the past couple of years since the global financial crisis and recession swept across the UK.

Some believe that the worst is over when it comes to the property and mortgage markets, and that whilst the market remains challenging after the chaos that the financial meltdown has caused lenders are starting become less stringent and are more relaxed over their lending rules. This comes after several years of severe restrictions that caused a mortgage drought in the UK and in other countries around the world.

However, despite the optimism of some industry officials there are many others that believe that the market will become even more challenging, with the coalition government cutbacks and concerns over jobs likely to affect the market. Many experts believe that people will find it increasingly difficult to get mortgage finance over the course of next year, and that it could be some time before things start to ease off and mortgage lending becomes more relaxed.

One industry expert said: “I don’t believe things will get any easier when it comes to mortgage finance in 2011, and if anything first time buyers could find things have become even more difficult as the banks struggle to cope with having to repay bailout money to the government.” She added: “First time buyers also still have the added pressure of having to raise larger deposits in order to get affordable mortgage deals, as well as the threat of interest rate increases next year that could make repayments less affordable.”

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Majority of first time buyers will not benefit from credit crunch

Recent falls in house prices are unlikely to benefit the majority of first-time buyers, says real estate provider Savills.

The company said a slowdown in the housing market will “provide some opportunities” for first-time buyers.

However, Lucian Cook, director of research at Savills, said it was unlikely to help most as they would still be reliant upon mortgage finance.

Mortgage finance is expected to be harder to acquire as a result of the credit squeeze.

“The first-time buyers who [price falls] will help are those who have accumulated relatively high levels of cash reserves, and who are well placed to buy,” he continued.

There will be less “brochure collectors” and “serial viewers” and thus less competition for property.

“The people who are going to be in the market to buy are really going to be in the market to buy,” said Mr Cook.

The November Halifax House Price Index, released today, found a 1.1 per cent monthly fall in house prices.

This is the third successive month it has reported a fall with the average UK house price now standing at £194,895.

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