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Mortgage Industry

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The outlook for the mortgage market, appears to be gloomy
according to industry figures.

Speaking earlier this week, at a conference for the mortgage
industry in Manchester, Jackie Bennett, head of policy at the
Council of Mortgage Lenders (CML), stated that there are fears
that the situation in the UK, could be heading in the same
direction, that the US mortgage market is, downward.

Bennett also quoted CML chief Steven Crawshaw, as expecting the
level of mortgage lending to fall by half through 2008, with a
30 per cent drop in business activity among lenders.

Bennett said: "The appetite for lenders to top best buy tables
has drastically diminished. Due to the servicing problems being
top now attracts, lenders are fighting to avoid the top spot,
rather than competing to be there."

Bennett also stated the situation for first-time buyers, is
similar to the mortgage rationing that occurred in the 1980s,
when new entrants to the housing market found it almost
impossible to secure home loans.

Many of those who have managed to clamber onto the property
ladder in recent years are not out of the woods yet, however.
There is a very real threat of repossession for those homeowners
that will feel the financial squeeze of increase repayments as
they come off attractive two-and three-year fixed rates over the
course of 2008. Although, Bennett offers reassurance to
homeowners fearing repossessions though.

She said: "Lenders are bound by regulation from the Financial
Services Authority, which dictates that they must treat
customers fairly."

Economist John Wriglesworth, stated that things in the mortgage
market won't improve any time soon. He said: "The market won't
recover until the end of 2009. Within the next six months,
lenders may revert to a model adopted in the 1980s whereby
potential borrowers were expected to save with a lender for six
months before a mortgage was offered."

He continued: The one bright spot among all this is the fact
that lenders want to attract more savings business to fund their
mortgage lending. As a result, many banks and building societies
now offer very competitive savings account. If buyers are
considering putting their plans to buy or re-mortgage on hold
until product rates fall slightly, it is probably worth, finding
a good account that will not only safeguard their deposit, but
one that will help it grow while they wait.

However, some mortgage providers, have seen positive situations
within the industry. High street bank and mortgage provider,
Abbey has reduced the rates on all their flexible and
tracker-rate mortgages by 0.05 per cent, in addition to reducing
some fixed rates by up to 0.17 per cent for borrowers with
higher deposits.

A spokesperson for Abbey Mortgages said: "The current mortgage
market poses an opportunity for financially strong lenders such
as Abbey."

The spokesperson continued: "Last month we announced a UK net
lending share of 16 per cent and since then we've seen an
exceptionally strong pipeline of new business, as well as
continuing to benefit from the improvements we've made in
retaining our existing mortgage customers."

He concluded: "Abbey had already decreased rates on its flexible
rate and tracker mortgages by 0.1 per cent in response to the
Bank of England's recent cash injection. This additional 0.05
per cent reduction anticipates future falls in LIBOR and will
further support the Bank of England's action in helping to bring
liquidity back to the UK mortgage market."

About the author: Ruth Jacob
Ruth is an author of several articles pertaining to Mortgages. She is known for her expertise on the subject and on other Business and Finance related articles.

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