From the day-before-yesterday's Times:
Lenders say that since wholesale lending — what banks lend to each other — collapsed in the credit crunch, government support has provided only 25 per cent of what lenders could offer previously... Michael Coogan, the director-general of the CML, said: “We welcome signs in the coalition agreement that some housing priorities are on the Government’s radar. But we still do not know how the incoming Government plans to address the funding gap looming over the next few years in the mortgage market.
NB, as at a year ago, outstanding UK mortgages were about £1,100 billion, so 25 per cent of that is about £275 billion.
From yesterday's Independent:
Michael Coogan, director general of the CML, warned that many mortgage lenders faced a funding crunch. Not only is the sector struggling to attract retail savers with interest rates at all-time lows, the Bank of England is insisting that it will close support plans such as the special liquidity scheme, introduced at the height of the financial crisis, from the beginning of 2011 onwards. The effect will be to withdraw around £400bn of funding for lending from the sector."
Another one bites the dust
2 hours ago
3 comments:
Prior to the credit crunch the bulk of mortgage business was in the sub-prime and re-mortgaging to pay off home owners debt. Presumably most of that has now dried up. Added to which mortgages lent were mostly in the region of 100% or more which is not the case now which would have released much more than 25% of the mortgage fund requirement, so why now is there not enough liquidity. Not only have you lost 125 billion but the other 275 billion + as well.
Excellent! Now people wanting to buy a house will have to save a deposit like we had to do all those years ago and then only get maybe 2 1/2 times salary as a mortgage. That should bring prices down pdq!
The current price situation is so ridiculous that this will self-actualize with lots of pain.
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