Paula John: Market news

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The Independent Online


Some of the big high street banks are taking advantage of the credit crisis to increase their share of mortgage lending. Abbey revealed some weeks ago that it had tripled its portion of the net lending market from 4.9 per cent to 15.9 per cent in the first quarter of the year, and Barclays announced at the end of last week that its share of new lending leapt to over 20 per cent in the same period – up from 8 per cent last year. But they are only interested in low-risk borrowers – the average new Barclays mortgage customer only borrows 53 per cent of their property's value.


The likelihood of further falls in the Bank of England base rate of interest this year is dwindling. Until recently, most experts predicted that the Bank would cut the rate by 0.25 per cent in June, and possibly lower it again twice this year, which would reduce the cost of borrowing for homeowners. But the Bank's priority remit is to control inflation – and falling rates tend to mean rising inflation. Last week inflation was way over target at 3 per cent and could rise closer to 4 per cent thanks to soaring oil and food prices. So the base rate is set to remain around the current level of 5 per cent this year.

GO FIGURE... £200m

Amount the Government has pledged to buy up newly built, unsold homes from struggling property developers, in a bid to help prop up the housing market. The empty properties will then be rented out to social tenants, or made available on a shared-ownership basis for lower earners. Gordon Brown announced the measure last week. Critics point out that £200m is a drop in the ocean, as it will only be enough to buy around 1,000 properties. Connells estate agents labelled the £200m pledge a "distraction technique" to draw attention away from the fundamental problems in the housing market.

Paula John is editor-in-chief of Your Mortgage