Mortgages are being squeezed as Banks reduce lending further.
The latest Credit Conditions Report from the Bank of England has indicated banks and building societies are likely to further reduce lending activity over the next quarter.
Noting lenders had reduced the availability of secured credit to households in the three months to mid-September by more than they had anticipated in the Q2 survey, due in part to declining house prices and the economic outlook, it added a further decline was now expected.
A spokesperson for UK Loans said “Confidence in the market is the catalyst for increasing the circular flow of capital. The downward trend in mortgage and public lending reflects the lack of liquidity flow between the lenders. We don’t expect any deceleration in the downward trends until after the US general election, when confidence may enjoy a dead cat bounce.
Whether this honeymoon period in the US will be enough to halt the downward spiral in the UK remains doubtful, given that the UK growth figures were based solely on overvalued housing stock and a general election victory for whoever in the UK will not enjoy the honeymoon period that the end of the Bush administration will inevitably bring.”
With artificial inflation the bubble will always burst.