The UK’s biggest house builder, Taylor Wimpey has added to the doom and gloom surrounding Britain’s housing market by blaming rising mortgage costs for pushing buyers out of the market and damaging the house building sector.
According to its Interim Management Statement, first time buyers and investors are "facing particular difficulties as a result of the increasingly restricted availability of mortgages." Its statement indicates that the credit crisis is beginning to take its toll on the building industry as well as the housing and mortgage market.
The statement reported low sales rates for the company, stating that "sales rates remain significantly below those of the equivalent period of 2007 on a pro forma basis, with higher levels of cancellations expected."
rates rise and criteria tightens, buyers, particularly first time buyers, are finding themselves frozen out of the market; consequently house builders are struggling to sell.
And, according to Taylor Wimpey the housing market turmoil is set to continue, its statement said: "We anticipate that the current subdued conditions will continue, with interest rates and mortgage availability being key determinants of customer confidence."
Despite three consecutive base rate cuts by the Bank of England over the past five months, mortgage lenders continue to keep it to themselves. In the last week some of the UK’s largest mortgage lenders
have defied calls for rate cuts by raising rates further.
The severity of the housing market situation is emphasised by Government plans to introduce a controversial lending scheme for banks that could result in tax-payer liability.
The strategy has been cautiously welcomed, if it is a success it could see an end to the pressures currently faced by the mortgage market.
In the meantime the UK housing market remains vulnerable. According to the Council of Mortgage Lenders (CML) gross lending for the first quarter of 2008 was down eight per cent on the first quarter of 2007.
Michael Coogan, Director of CML, said: "Lending on completed transactions is currently running at levels considerably lower than a year ago. However, the picture for mortgage approvals for new business and prospective lending levels in the next few months is worsening.
"We await the eagerly anticipated announcement of further action by the Bank of England to respond to these rapidly worsening market conditions.
"Early action is needed if we are to be able to maintain a market in which UK borrowers continue to be able to access mortgage funds at reasonable prices." Mr Coogan concluded.
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