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Eurozone crisis hitting mortgage market, says CML

Eurozone crisis hitting mortgage market, says CML

Category: Mortgages

Updated: 21/05/2012
First Published: 21/05/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The continuing crisis in the Eurozone is having a negative effect on the housing market, lenders have said.

Mortgage lending fell back to £10.2 billion in April, 19% lower than in March, when mortgage advances totalled £12.6 billion.

In fact, mortgage lending in April was the lowest seen in the market for a year.

Figures in March were boosted by first time buyers looking to take advantage of the stamp duty holiday which came to an end on March 24.

The initiative saw a spike in mortgage lending, as first time buyers saved between £1,250 and £2,500 in tax.

While a fall in lending was expected, the continuing problems in Europe have compounded problems, as banks and households have adopted a more cautious approach.

Lenders are also warning that if the crisis persists, the availability of mortgages could fall yet further, with the pricing of mortgages increasing.

"Mortgage lending activity has been relatively buoyant in recent months, with stronger lending for house purchase underpinning the more upbeat lending picture," said Bob Pannell, chief economist at the CML.

"The underlying picture is likely to be a bit stronger than the April figure suggests, because some first-time buyers are likely to have brought forward their transactions to March to take advantage of the stamp duty concession that was coming to an end.

"Eurozone developments are highly uncertain and have the potential to undermine UK economic prospects and conditions in our housing and mortgage markets.

"The underlying picture is likely to be one of easing momentum in the housing market, but with potential for a sharper downwards correction on bad eurozone news."

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