The banks themselves are also in fear of a further European crisis, because of this they are in a position where they are particularly unwilling to lend. The UK Government have also taken a stance where they are quite happy just to keep the status quo and when reading between the lines they are quite happy for the banks to keep their strict lending criteria and make it very difficult for any new buyer to enter the property ladder. Quite often we hear stories that people get rejected for a mortgage application for apparently no reason at all and legally the banks reserve the right to not have to disclose their reasoning. Further information on this can be found at http://www.yousellquick.co.uk/
Further speculation in the news has discussed how times may get even harder for new home buyers and even existing homeowners to get a mortgage and discussions of restricted on interest only mortgages may hit the property market very hard. Currently around 70% of mortgages are interest only meaning that the owner only has to pay the monthly interest and it is optional to pay down the actual capital of the loan. The problem that the government has suddenly realised is that many UK Citizens have come to the end of their loan and period which is often 20 years and they are still left with their entire debt outstanding. Usually it would be a simple re-mortgage that would allow the owner to carry on their term, but this option has become unavailable for those approaching their later years in life. To put it simply it’s very difficult to get a mortgage if you are above the age of 60, reason being the usual mortgage term of 20 years would mean that you are 80 years old by the time you have paid of the debt, which is a huge risk for the banks that they are not prepared to take. What has suddenly become apparent is that many people are reaching the end of their term and are unable to extend their loan, thus being forced to sell their house fast. Because of this the government have strongly hinted that they dispose of interest only mortgages all together meaning that in the future house buyers will have to pay down a portion of the capital each month as well as the interest. This will make monthly mortgage payments a lot more expensive and buyers will only be able to afford a lesser value home. When looking at the wider picture if these measures were put in place then less people will be able to afford a home and get on the property ladder which in turn could certainly hamper the market.