Eurozone crisis impacts UK mortgage market

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by Gill Montia

The Council of Mortgage Lenders (CML) has warned that eurozone developments are once again highly uncertain and have the potential to disrupt the UK’s housing and mortgage markets.

The threat of a Greek exit from the euro has unsettled the money markets and according to the CML, “funding markets have once again effectively closed”.

If the crisis persists, and there are few reasons to think otherwise, UK mortgages are likely to become less available and more expensive, along with consumer and business loans generally.

Notably, the CML states, “we should expect uncertainty, and fear of the more extreme outcomes that are possible in a eurozone context, to foster greater risk aversion on the part of banks”.

Meanwhile, the Council estimates that gross mortgage lending fell back to £10.2 billion in April, 19% lower than March and only 2% higher than a year ago.

Given the stamp duty concession, which ended in March, the CML sums up: “The underlying picture then appears to be one of easing momentum in the housing market, but with potential for a sharper downwards correction on bad eurozone news.”