Higher interest rates, lack of confidence, and introduction of mortgage regulation are causing a slowdown in the housing market. Even though the latest figures from the Council of mortgage Lenders show an increase in mortgage lending, remortgaging seems to be driving the market, not new mortgage loans.
According to the Building Societies Association, loan advances have dropped from nearly £4 billion to £3.1 billion in the same period. Saving became more popular for the year ending 2004. Better rates have encouraged more deposits, with over £998 million going into cash Isa's, which is the highest rate since 1997.
Our view
It is probably for the best that interest rates are being squeezed to put the brakes on the housing boom. Not good for those who over committed to get on the mortgage ladder though.