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October 17, 2007

UK mortgage market is good

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by Kay Mitchell

UK mortgage market is good

According to the Intermediary Mortgage Lenders Association (IMLA), the UK mortgage market is essentially sound in spite of the recent turbulence in the global financial markets and on the high-street.

The IMLA commented that conditions are now returning to some normality in spite of confidence falling across the market and the opinion of the chancellor, Alistair Darling, in last week’s pre-Budget report.

The Council of Mortgage Lenders (CML) announced that 1.06% of mortgages have been in arrears for over 3 months and 0.12% of properties have been repossessed. However, according to IMLA, given the 11.8 million mortgages across the country, these figures are insignificant.

A spokesperson for IMLA remarked that the problems in the financial and mortgage markets was attributable, not to an actual problem with the credit quality of UK mortgage books, but fears among investors that UK lenders could run into the same problems that have taken place in the USA.

The spokesperson added that the reality is that demand continues to exceed supply and the worst may be past. The securitisation markets are not fully back in business, but there is renewed enthusiasm from investors who recognise the low risk nature of UK mortgage-backed assets continued the spokesperson.

IMLA concluded that there have been many private sales of loan portfolios, at less fine pricing than prior to the market disruption, but this is an indication that investors are now realising that the reaction was exaggerated. It is anticipated that the market will regain its momentum.

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