Mortgage Lending Reaches Nadir

[May 22, 2008.]

 

The real estate market has not recovered from its crisis. Far from it, the market is now at a record low, full of dismal figures it hasn't seen since 1975. During the first quarter of 2008, only 142,000 mortgages were lent to would-be American home owners. During the month of March, Americans obtained only 47,000 mortgage loans.

The Council of Mortgage Lenders (CML) is in despair. The CML expects the number of mortgages given and sales of homes made to get even lower in the near future. The credit crisis has affect the functioning of banks, limiting the amounts of lending they are able to engage in.

Michael Coogan, the director general of the CML, stated that “home purchase transaction volumes will continue to deteriorate in the coming months as recent approvals data from the Bank of England has shown.”

Meanwhile, in England, the Royal Institution of Chartered Surveyors reveals that the amount of English homes to have dropped is at a 30-year high. Only in 1978 has England seen a similarly critical rate of falling property values.

The Bank of England tried to remedy the situation by lending money to other banks in the United Kingdom, so that the banks may start lending and borrowing amongst themselves. However, Mr. Coogan is skeptical of the effect this measure has had on the actual lending and borrowing activity between the different banks.

At the same time, in the US, one particular demographic that has been hit by the real estate crisis is individuals or families who are buying a home for the first time. The statistics for how many first-time buyers are obtaining mortgages on a monthly basis were first created in 2002. During March of 2008, those statistics were at their lowest point ever, with only 17,800 first-time buyers.

For the entire first quarter of 2008, the amount of mortgages lent to first-time home buyers was only 53,700. Quarterly figures for first-time buyers have existed for a long time, and the figure for this quarter is, again, the lowest America has seen since 1975.