There has been much talk about helping with the mortgage crisis throughout the world in the last few months; however there still doesn’t seem to be many lending institutions lending. The mortgage lenders in the UK are being asked to resume lending right away. The government has helped with the interest rates and different packages and the banks still seem unwilling to resume lending. The levels for lending are not expected to increase in the upcoming year and this could definitely continue to harm the economy.
The lenders have not let up on the lending conditions so that means that new loans are very scarce. If it continues the UK will not reach the lending conditions they saw in 2007 when the New Year arrives. The outlook for 2009 has the same dire consequences. Michael Coogan addressed the Council of Mortgage Lenders at the annual conference and reiterated that nothing will change in the upcoming year to help achieve higher lending levels.
One of the reasons that the government is so adamant that the banks move forward with loaning more money is because it was one of the main principles of the thirty seven billion pound bailout. If the banks fail to lend the same amount that they did in 2007 the financial markets will continue to suffer. The Bank of England also asked the banks to pass on to their customers a 1.5 percent point cut. These conditions are not being met and it is unclear what measures may be taken against the banks if the rules are not followed. There are three banks that are in line to receive the bailout money. They are the Royal Bank of Scotland, HBOS and Lloyd’s.
If the banks refuse to allow money to be loaned there is no way for the levels to meet those of 2007. Michael Coogan, the Director General of the Council of Mortgage Lenders fears the actions that have already been taken are just not enough to get money flowing more freely. The recession that has gripped the nation and the fact that the smaller banks that were solvent were hurt by the bigger banks failing shows that lending is not going to get back to normal.
There is hope that at some point banks may again be ready to offer simpler mortgages with better interest rates, but it doesn’t look like it will be possible in 2009. There is still a lot of concern that foreclosures will continue to be a problem and that this needs to be addressed as well. While as of this writing there has been some relief in the foreclosure sector, such as delaying the foreclosure of homes, there is still no foolproof way to keep these people in their homes.
Everyone is still concerned that the bottom of the housing and banking industries has not happened yet and until they are sure, it is unlikely that the money for mortgages will be any easier to get in the upcoming year.