According to the Council of Mortgage Lenders (CML), there were 529,300 UK mortgages issued in 2010 with a value of £77.1 billion. This represents a three percent increase from 2009 in terms of numbers and an 11 percent increase based on value. This was the highest figure since the year 2007, during which 1.14 million home purchase loans were issued.
First time buyers accounted for 194,600 mortgage loans in 2010, a one percent decline from 2009. The 2010 figure is less than half that of 2006. Last year, a sharp decline in levels of remortgaging decreased the amount of overall lending. Remortgaging levels hit a 13-year low in 2010 due to low interest rates and more stringent lending criteria.
Experts believe that lending conditions will not get any better this year, causing housing prices to continue their decline. In December 2010, overall lending was 37 percent lower than the same month in 2009, partially due to the requirement that homebuyers make larger deposits than during November. This lead to a decline in first time homebuyers, resulting in numbers that were 42 percent lower than December 2009.
CML Director General Michael Coogan stated that though the lending industry became more stable during 2010, activity levels were at historic lows. He said that lenders are still not serving all interested parties, particularly shunning those who cannot make large deposits. His beliefs are that lenders will continue to face restricted access to funds and economic conditions will result in lower demand from consumers.
As lending remains flat, it is inevitable that housing prices will further decline. To compound the issue, economists do not believe that enough jobs will be generated by the private sector to offset increasing unemployment in the public sector. They predict that housing prices will decline approximately ten percent in 2011 and continue their decline in 2012.