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The recent recession or credit crunch has left an unforgettable scar on the world economy, which has bothered the developed countries rather than the developing or underdeveloped nations. Mortgage market in UK has been severely hit by the recession as it plays the supporting role in the eruption of credit bubble. Mortgage market splurge gave rise to the increase in house prices resulting in new sources of funding. This funding was also reduced day by day due to the customers who were not creditworthy. But nowadays, the mortgage market is slowly but steadily catching up.
The Council of Mortgage Lenders confirmed that there has been a 24% increase in the number of mortgages since July 2009. As per the data released by Financial Services Authority (FSA), it is believed that mortgage lending has increased when compared to the last fiscal. The Bank of England revealed the successful mortgage applications which stood at 50,123 in July when compared to 47,891 for the month of June 2009.
The banks also offer various schemes and deals attracting the customers to mortgage loans. HSBC announced the low rate discount deal offering 1.99 percent mortgage for the customers with 40 percent deposit and £1199 for arrangement fees which has doubled the influx of customers. Paul Broadhead, BSA Head states that buyers are increasingly getting involved in property market and viewing it in positive light.
Even though there have been some good news for mortgage markets, the industry reports state that arrears will still be a problem for the mortgage markets. Research reveals that more people are intending to buy new homes and taking out mortgage deals but could not find access to loans. Building Societies Association (BSA) survey has found that 49% of people, who are looking for mortgage deal, could not find proper access to loans easily.
The effects of recession are still haunting the mortgage seekers. The banks are not providing easy access to mortgage loans due to strict scrutiny of required documents in anticipation to avoid another credit bubble. The prices are increasing and there is upsurge in the property market. The recession is slowly moving out, but it will take more time for the banks to regain confidence in the property market so as to lend mortgage loans. The rise in properties is however a good sign and indicates good show for the mortgage loans in the near future.
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