Are lenders really changing their position and lending more or are they just giving the appearance of lending to prevent government intervention in lending?
The Bank Of England released figures yesterday that show mortgage rates have increased despite the reintroduction of riskier mortgage products and all this in the light of 0.5% base rate. It makes you wonder what the game plan is for the lenders who are not passing on the benefits of such low rates and it also makes you wonder about how toxic the banks balance sheets really are.
But what must be remembered is that in a recession no oneÂ is going to lend without factoring in risk, would you? If a friend or family member asked you for a loan when their job is on the line you would instantly know that your chances of getting that money back anytime soon or ever are greatly diminished by their personal circumstance and the same goes for lenders. A clear signal is being sent out by lenders and that is they have no confidence in either the housing market or the economy, and until they lower the deposit on affordable lending rates there is really no hope for the housing market.
In fact many lenders have been actively trying to devalue the valuations of estate agents so that the sellers will not lend to the buyer and that leaves only one conclusion……Banks see no sustained and long term recovery in the housing market. There is one sign to look out for when it comes to a housing recovery and that is when a deposit on an average house is affordable to the man on an average wage with an affordable interest rate on the loan then we will see the recovery.