Borrowing Five Year High for UK Residents

When totalling up credit cards, overdrafts, and loans in Britain the numbers show a five year high for borrowing amounts.  This means that many of the Britons do not have the cash they need.  Consumer credit use rose to 2.35 billion pounds just in February and is the highest rate since October of 2002.  These numbers were released by the Bank of England in March.

The increase has shown a jump in loans and overdraft fees that is the largest since April of 1993, with an outstanding debt of 350 million pounds in credit cards alone.  The Bank is also showing figures that the mortgages being approved have dropped.  With the mortgage crisis in the US the UK changed how much they were willing to approve for a loan so the 40 percent drop in the last year is a result of those needs.  There were only 73,000 home loans approved in February when you have 120,000 last year in February.  This is the second lowest amount since 1995.

The figures have confirmed there is a slump in activity regarding the UK property market.  It has also confirmed the expectations that housing prices are going to lower in the next year by at least 5 percent in the fall.

Housing prices in the last decade have been on the rise.  The values of mortgages were also advancing as the housing prices increased, but now this has changed with the economy inflation.  At the moment there has been lending of about 7.45 billion pounds, where in that amount was 10 billion pounds last year.

With the change in the economy where the housing prices are falling and the mortgage lenders making it tougher to get approved many of the potential buyers are not willing to invest in a home.  The mortgage approvals from the Bank of England are confirming mostly what everyone already knows.  There is a great deal of pressure to avoid a dangerous situation, which has made it necessary to tighten the reins on the lending practices.  The UK realises that a credit crunch would not help and that they must avoid the worst.

An economist, Richard Snook, believes that the number of housing transactions has been substantially lower because of the credit crunch, but how it will affect the housing prices is yet to be determined.  Most believe the housing will fall a significant degrees.