Political uncertainty cast shadow over housing market

Click to follow
The Independent Online

Mortgage lending is slowing significantly, according to the latest figures from the Bank of England.

New mortgage approvals increased slightly from February to March but figures for this year's first quarter have been close to the lowest for a decade.

The stamp duty holiday last year helped towards a spike in home sales and optimistic speculation of a continued housing market recovery, but do the latest figures show a turnaround?

Brian Murphy, the head of lending at independent mortgage broker Mortgage Advice Bureau, believes the slowdown could continue until well after the election. "Many prospective housebuyers are putting everything on hold until there is greater clarity around how the next parliament, hung or otherwise, will deal with the deficit. Before they commit to a long-term purchase, many prospective borrowers want to know just how hard their pockets will be hit in the years ahead."

Meanwhile remortgages have climbed above the previous six-month average because of the same uncertainty. "More borrowers are starting to take action to protect themselves from possible interest rate rises and this is reflected in the increased number of remortgages," says Mr Murphy. "There is a feeling that, however much the bank may want to keep rates low, it may not be able to do so given rising inflation."

Looking for credit card or current account deals? Search here