The number of new mortgages taken out in September was 20% lower than for the same period last year with 25,000 fewer mortgage deals being arranged. It's a high figure and largely unexpected. The change can't be put down to any seasonal factors and a variety of candidates have been suggested for the real reason. The figure was only 6,000 lower than for August but that was already a lower figure than last year. There will always be a level of mortgage business going on despite the state of the housing market due to people choosing new remortgages.

The Council of Mortgage Lenders suggests that the number of mortgages for the whole of 2008 is expected to be 15% down on figures for 2007.

The huge drop in the number of mortgages being written is put down to a range of factors. The main ones thought to have caused the situation are the steady stream of small interest rate rises introduced over the past year compounded further by some additional increases due to the recent credit crunch; the introduction of HIPS (Home information packs) causing people to think twice before opting to put their properties on the market and widespread predictions that house price growth will slow to a standstill next year after several years of high growth. People planning to move to a bigger home and take on bigger mortgages could be feeling nervous about buying at what may turn out to be the peak of the near-term market.

In further coverage the prospect of an increase in home repossessions as a result of defaults on mortgages is predicted for next year. The return to the mass repossessions and the widespread negative equity situation of the 80's and 90's is not expected, mainly because house prices have risen quite substantially in recent years and only those who have bought very recently would be at any heightened risk of falling into a negative equity situation.

Return to News index