The number of People taking mortgages has gone up by 4%, February figures showed.

A total of 24,300 loans for house purchase during the month, up from 23,400 in January, the Council of Mortgage Lenders said .

however there’s still very little activity compare to historical standards, with mortgages taken out by people buying a home running at only around a third of the average total for February of 76,000 seen between 2002 and 2007.

There was also a rise in the number of first-time buyers getting on to the property ladder, with 9,400 mortgages taken out by people buying their first home during the month - 7% more than in January.
as a first sign of coming out of this slow market

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The Financial Services Authority ( FSA ) continued its campaign of tackling irregular practices throughout the UK’s financial services by imposing a serious financial penalty on a mortgage firm.

GE Money Home Lending, the UK’s 14th largest mortgage firm during 2007, was on the wrong end of a hefty £1.12 million fine for failings in its dealings with nearly 700 customers. It was reported that borrowers had lost a total of £2.3 million.

The FSA said that the mortgage firm had failed to respond adequately to failures which the company itself had identified around two years previously. The fact that customers ,who had lost an average of £3,000 each, were potentially placed in a position where they could also suffer from an adverse credit profile, warranted corrective action.

In the past few months the industry watchdog appears to have ramped up its efforts to ensure that customers are getting a fair deal from finance providers and is sending a clear signal that firms in the sector must clean up their act.

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The British Bankers Association ( BBA )has released data on mortgage approvals that shows that the UK housing sector is continuing in a downwards spiral. According to the BBA only 21,086 mortgages were issued in August. This represents the lowest total since 1997.

Home loans dropped by around 12,000 ,in comparison, to the average number of those approved over the last 6 months.

The BBA commented that the decline in the housing market’s fortunes can be blamed ,in part, on the Government’s delay in addressing the issue of stamp duty. The association added that the credit crunch had placed substantial financial pressures on families and when coupled with the fact that lenders are imposing stricter lending criteria, has resulted in the suppression of the sector.

Previously, the Government had announced that it would suspend the stamp duty on houses ,that are priced at £175,000 or under, for one year . However, market analysts believe that the Government acted too little and far too late to arrest the housing slump.

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In a move designed to help reverse the decline in the housing market the government has announced that it will suspend stamp duty for 12 months on houses that cost less than £175,000. The stamp duty holiday is expected to help mortgage applicants who are already being hit by the effects of the credit crunch.

Economic analysts have generally welcomed the attempt by Alistair Darling to fight the current housing slump.

Additionally, Communities Minister Hazel Blears has announced that the government will launch a mortgage rescue package to help vulnerable families stave off repossession and a shared equity scheme designed to assist first-time buyers.

Blears added that these schemes are not aimed at helping those people who have recklessly mismanaged their finances but is appropriate for those householders who have suddenly found themselves in a difficult position despite their best efforts.

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With the British housing sector in dire trouble the government – in the form of Chancellor Alistair Darling and Housing Minister Caroline Flint – are said to be ready to unveil a mortgage package that is designed to help to stabilise the market.

The bold plan will see Councils empowered to offer poverty stricken families the chance to obtain finance by selling a portion of their property. Councils will also be able to assist first-time buyers with deposits.

Some industry experts have advocated the need for the government to introduce a brief stamp duty holiday. However, the Chancellor is said to be reserving a decision unless there is further deterioration of the housing sector.

With house prices suffering their steepest decline in nearly 20 years and analysts suggesting there are no signs of recovery, it is predicted that sellers will have to reduce their prices in order to have any chance of selling their property. Additionally first-time buyers are finding that it is increasingly difficult to overcome the tightening lending criteria that is being applied by the major mortgage providers. For Instance, the Alliance and Leicester Bank has said that it will not issue a mortgage to anyone who cant raise a 15% deposit.

Estate agents are also bearing the brunt of the housing sector malaise and it is estimated that as many as 10,000 jobs will be lost.

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The UK housing sector continued to show signs that a slide into recession is inevitable as the Nationwide Building Society reported that house price values had fallen by 10.5% over the last 12 months. This dramatic fall in prices represents the quickest rate of decline since 1990 and thousands of homeowners are now finding themselves in negative equity. The building society predicted that the trend will continue until the end of 2008.

To add to this bad news, industry analysts warned that the UK’s static economic situation means that in certain geographical areas house prices could fall by as much as 20%

Economists also fear that if the economy is not revived, in the near future, increasing numbers of people will be forced to part with their homes, especially if there is an increase in unemployment levels.

There does , however, appear to be light at the end of the tunnel, as the Nationwide stated that it expected that the housing market will experience some kind of meaningful recovery by 2012.

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GE Money Home Lending reported that over 410,000 UK mortgage applicants have been refused a mortgage over the last 18 months. The firm also revealed that around 480,000 people had to apply an average of four times before they were able to secure a mortgage or loan.

A spokesperson for GE Money Home Lending stated that consumers should be aware that multiple applications will be recorded against credit records and may prove to be counter-productive.

The firm recommended that applicants do not waste their time by applying to various lenders. They should conduct research to find out which of the reputable lenders are most likely to grant them a mortgage. Anyone who is unsure of how to navigate the mortgage market should seek expert advice.

The use of comparison websites such as Save On Bills will help consumers to find the best mortgage deals.

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In another sign of the continuing decline in the UK mortgage market the Halifax Bank has announced that it will close over 50 of its estate agency branches. It is expected that the cuts will result in the loss of around 100 jobs. The lender blamed the closures on the credit crunch which has led to a downturn in house sales during the last 12 months.

Housing sales are reported to have fallen by 50% in comparison to last year’s figures.

The Halifax said that although 100 people would be unemployed because of the closures, another 450 staff would be redeployed to other branches.

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The Council for Mortgage Lenders ( CML ) has warned first time home buyers that they will find it increasingly difficult to obtain a mortgage over the coming months. The latest figures show that the rate for mortgage lending has fallen by 30% in July.

The CML stated that the current decline was due to a lack of mortgage funding and the slowing of demand.

The CML added that consumer demand in the UK’s mortgage market had slumped because of the fall in house prices, increases in gas and electricity costs and the tightening of lending criteria, all of which have been brought on by the current global credit crisis.

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With the credit crunch in full swing, borrowers have found it increasingly difficult to maintain their mortgage repayments. The fact that the majority of lenders have withdrawn some of the cheaper and most popular mortgage deals, has not helped.

However, Halifax and Abbey ,two of the UK’s largest lenders, have signaled their intention to attract borrowers by entering into a price war. Both financial institutions have announced that they are to launch a series of interest rate cuts on their two year tracker packages.

Despite the reduction in rates and the new competition for customers, industry analysts believe that the decline of the housing sector will continue for some time.

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