With lenders and networks admitting to a significant drop in volumes post-‘Mortgage Day’ it now seems inevitable the mortgage lending figures for November will drop significantly, adding to a crisis in confidence amongst property sellers.
Tony Jones, managing director of Pink Home Loans, warned that recent data from the Halifax, Nationwide and the Royal Institute of Chartered Surveyors (RICS) showed the market had slowed significantly.
“If we witness a drastic decline in the lending figures over the next couple of months then it could cause a further drop in confidence,” he said.
And economist Roger Bootle from Capital Economics, who recently predicted a 20 per cent drop in house prices, agreed.
He said: “The fact that the housing market has become so overvalued in recent years means it is very vulnerable to small shifts in sentiment.
“If the recent sharp drop in buyer demand is met with a further increase in the number of people placing their homes on the market, then it seems probable that prices will have to fall if sales are to be made.”
He added: “Once it becomes widely accepted that house prices are too high, then the initial fall in house prices may develop its own momentum.”
However ecomonist John Wriglesworth, countered that the market had in effect been correcting itself for the last few months. “The Rightmove and Hometrack surveys have shown the market has been falling for a while,” he said.
He added that even if some lenders and brokers were unable to trade, there were plenty of others who would be prepared to take up the slack.
“It is rather like redistributing the deck chairs on the Titanic at the moment,” he commented.
