Housing market stagnant

Posted on March 19th, 2011 | Categories - Mortgages

Banks are still failing to approve mortgage applications.

Rents are rising because fewer homes are being put up for sale.

Mortgage lending remained at low levels in February, according to a new report.

The findings, revealed by the Council of Mortgage Lenders (CML), show that gross lending was almost at the same level as figures recorded in January. However, total lending was slightly higher than the same period last year.

One of the reasons cited for the sluggish lending was the lack of appetite for new borrowing amongst people who are worried about the state of the economy and their job future.

Bob Pannell, chief economist at CML, said the council still has an “underlying view that this is going to be a challenging year for households and the housing market”.

He continued: “The housing market remains stuck in a rut and… we do not anticipate much relief in next week’s Budget”.

A separate report indicated that rental rates are rising due to a shortage of homes for sale on the property market. The research from LSL Property Services outlined that rents rose by 0.2% in February to £684 a month.

David Newnes, estate agency managing director of the firm – which owns Your Move and Reeds Rains – said: “The consistently constrained level of lending to home buyers has bolstered demand – and rents – in the private rental sector during what is typically a slower period”.

He added: “With the mortgage market even more sluggish since the start of 2011, this backlog of frustrated buyers has increased even further and rents have risen correspondingly”.