Mortgage Lending Fall Means no UK Housing Market Recovery in Sight

The volatility of the UK housing market has once again bounced onto centre stage and danced all over the recent hopes for recovery caused by "various indicators".

I couldn't believe it when I read an article by Patrick Collinson last week on how UK house prices were about to stabilise.

Patrick Collinson is one of the few voices of reason, and regularly slates people for talking up the market, yet there he was saying that Rightmove's report of the 4th monthly rise in asking price was "fresh evidence that the housing market crash may be levelling out".

Fresh evidence on the back of multiple reports of increased activity from the Royal institute of Chartered Surveyors, the National Association of Estate Agents, and multiple independent agents, as I read, anecdotal evidence of bidding wars, and foreign buyers gazumping UK residents.

Today the bubble burst when the Council for Mortgage Lenders revealed that UK mortgage lending fell 9% in April, just a month after the British Bankers Association reported a fall and the Bank of England said lending had fallen to an eight year low in March.

According to Joseph Harwood, of Gloucester Property investment firm Rock Star Investment, the fall in lending is not just because of the bank's tight lending policies, but because of unrealistic vendors unwilling to drop their prices sufficiently.

"We are finding very few difficulties with obtaining finance for property purchases. We believe this is because we are buying realistically priced properties. Banks are not going to give a mortgage for a property that could be bought for 20% a few months down the line," he said.