Mortgage lending has suddenly dropped to its lowest level in 12 months, giving rise to fears that house prices will fall and the property market will grind to a halt.
Figures from the Council of Mortgage Lenders show that last month’s figure of £10.2 billion was higher than April 2011, but much lower than last year’s peak of £13.6 billion, which happened in September.
Speaking to the Telegraph, Howard Archer of IHS Global Insight said: “The latest evidence reinforces our belief that house prices are likely to fall over the coming months. We are expecting them to be around 3 per cent lower by the end of 2012.”
Bob Pannell, Chief Economist at the CML was more upbeat, saying: “The overall picture is likely to be a bit stronger than the April figures suggest, as there was a rush at the end of March to complete transactions before then end of the stamp duty concession.”
The majority of insiders are saying that the drop in lending was inevitable thanks to the stamp duty holiday ending, however, many are pointing to the Eurozone crisis as the bringer of an even bigger drop in the property market. Mark Harris, of mortgage brokers SPF said: “The cross border nature of banking means that the UK’s banks cannot remain immune to what happens in the Eurozone. There is already less appetite to lend, if the crisis continues it could become very difficult to get funding.”.