NEARLY one in four people claims they are unable to get a mortgage due to the tighter lending criteria being used by banks and building societies, a survey showed today.
The poll found 22.5 per cent of people said they did not qualify for any of the mortgages that were currently available, according to the National Association of Estate Agents (NAEA).
Instead, 56 per cent of those questioned said lenders would hav
e to relax their restrictions and lower the size of the deposit they were demanding in order for them to be able to buy a property.
And 58 per cent of people said they thought banks would have to lend more if the UK was to pull out of the current property slump.
The problems in the mortgage market caused by the credit crunch have led to banks demanding increasingly high deposits from borrowers, with most institutions reserving their best rates for people with at least a 40 per cent deposit or equity stake.
There are only 119 mortgages available to people borrowing 90 per cent of their home's value, down from 1,152 in November 2007, with some lenders charging interest of more than 7 per cent to borrowers with only a 10 per cent deposit. Recent figures from the Bank of England also showed that net lending, which strips out redemptions and repayments, fell to a record low of £324 million in May.
The problems in the mortgage market have intensified the housing market correction, and economists have warned that any recovery in house prices is likely to be fitful while the mortgage drought continues.
Peter Bolton King, the chief executive of the NAEA, said: "We cannot let the banks convince us that shutting up shop when it comes to mortgage lending is a responsible move. The decision to restrict mortgages so severely is rooted in self interest.
"The government must do more to put pressure on those banks that are refusing to lend, while highlighting those banks that are easing restrictions to help get the economy moving again. It is time to accept that responsible lending to responsible people is necessary for the country."
Opinion Matters questioned 1,800 people during June.
The findings were supported by another survey published yesterday which concluded there is little sign of improvement in the mortgage market, four months after the Bank of England first embarked on its programme of quantitative easing.
Figures from financial information group Moneyfacts show that the number of mortgages available to people with a 10 per cent deposit has increased only slightly since quantitative easing was launched, rising from 101 at the beginning of March to 119 now.
The rise is mainly due to one lender, Britannia, offering a new range of 90 per cent products.
But the total number of residential mortgages available has actually fallen during the period from 1,426 in March to 1,259 at the beginning of this month.
At the same time, while the cost of a two-year tracker mortgage has remained broadly unchanged, the average cost of a two-year fixed rate deal has risen from 4.79 per cent to 5.08 per cent, despite interest rates being cut by 0.5 per cent in March when the Bank said it planned to embark on quantitative easing .
UPS AND DOWNSHOUSE prices resumed their downward trend during June – dropping by 0.5 per cent, Britain's biggest mortgage lender said yesterday.
The fall, which followed a 2.6 per cent rise in May, left the average UK home costing £157,713, in line with prices during the second quarter of 2004, according to Halifax.
But the group said there are signs that the rate at which house prices are falling is easing. House prices dropped by only 1.9 per cent during the three months to the end of June, the smallest quarterly fall since the beginning of 2008, and well down on declines of between 5 per cent and 6 per cent during the three final quarters of 2008.
The annual rate at which prices are falling also eased to 15 per cent, compared with 16.3 per cent in May – based on average prices during the previous three months compared with the same period a year earlier.
Martin Ellis, Halifax housing economist, said: "The mixed picture of monthly rises and falls so far this year contrasts sharply with the consistent succession of significant monthly declines recorded in 2008. This indicates that the underlying rate of decline in house prices has eased."
The Halifax figures contrast with those issued by Nationwide for June, which showed a 0.9 per cent rise in house prices – the third increase in four months.
But economists have warned that any recovery in the housing market is likely to be fitful.
