Despite record low levels of mortgage lending in the UK, the Bank of England forecast conditions would get worse before they get better. It appears the Bank of England’s scheme to inject £50billion into the mortgage markets has failed to restore liquidity and confidence. Many banks report that they are planning to make lending criteria even more strict - such as increasing the required deposit. The difficulty of getting a mortgage is simply causing many to ‘give up’ and forget about the property ladder.
Many are calling for more government action to help free up the mortgage sector. If the credit crunch continues to worsen house prices will be dragged lower and could push the UK into recession.
However, the difficulty is that government intervention may prove quite difficult to achieve. If the Bank of England’s injection of £50billion failed to move the money markets, it is not clear how the government may be able to turn around the mortgage sector. It appears that the difficult credit conditions may last for longer than initially thought.
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[...] Bad news for homeowners continues [...]
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