The British Banker's Association reported that U.K. mortgage lending was down 30% in March, to GBP13.7 billion ($26.08 billion), versus numbers recorded at the same time last year. Despite the dramatic fall in lending, market sources remain optimistic and said the trend is consistent with housing indicators signalling a bottoming out of the U.K. mortgage market.
But with unsecured consumer credit also continuing to weaken, housing market fundamentals continue to feel the fallout. Hometrack reported average home prices fell 0.1% in April, and are down 1.5% in 2005 year-to-date. Last week the U.K. department of Constitutional Affairs reported 26,000 mortgage repossessions, a 25% increase from the previous quarter and the highest repossession figures since 1995, according to market analysts.
"Not all orders result in eviction and repossession if payment arrangements can be made; however the recent trend reflects higher 90-plus day delinquency rates and is of concern," said analysts at Merrill Lynch. "Recently, the U.K. has enjoyed low levels of actual repossession, but there are fears that this could be the bottom of the cycle, as high levels of consumer indebtedness and recent interest rate rises squeeze borrowers."
Copyright 2005 Thomson Media Inc. All Rights Reserved.
http://www.thomsonmedia.com http://www.asreport.com
