The FSA recently announced that should the economy see further drops in unemployment and rises in interest rates the Middle Class familis of the UK will be hit the hardest.

Such vulnerability is shown due to the increased amount of borrowing over the years and can only be seen as more bad news should these two equations meet again.

The difference in this recession to the one in the 90’s is that a generation of ‘borrowing culture’ has been spawned and now that it is taking it’s toll on our pockets and bank accounts. We are used to spending on credit cards and being ‘rewarded’ for our loyalty, but now this has been reduced and families are finding it hard to keep up their repayments on their mortgages.

Apparently we are out of the recession, but the recovery for many of us may not bear the fruits of our labour for some time yet.

The Council of Mortgage Lenders (CML) said UK mortgage lending increased by 14% in December compared with November, to £13.7bn and the market was entitled as being ’surprisingly strong’.

The latest figures from the CML show that UK mortgage lending was up 3% in December compared with the same month a year earlier.

A CML economist said that the December lending figure was “surprisingly strong” as seasonal factors usually meant a slowdown compared with November.

“Evidence suggests that the rise was driven by a surge in house purchase completions,” he said.

“The most likely explanation is that buyers of cheaper property wanted to complete their transactions before the end of the year to beat the end of the stamp duty holiday.”

He predicted that the mortgage market would be stronger in 2010 than in 2009.

2010 so far is showing that Tracker Mortgages are proving popular.

Ok so we’re only 3 weeks into the year, but studies show that more people are now opting for a Tracker Mortgage than at any point since the end of 2008.

Why is this you may well ask? Well with the average difference between the best fixed rate mortgages and the initial rate on the best tracker mortgages, it will take a substantial rise in the bank rate for the borrower who takes out a trackers mortgage to be a lot worse off than one on a fixed rate mortgage.

Some might say ‘about time too…’

During the 2007 housing boom, 23% of mortgages were based on self certification, so called ‘liar loans’, and managed to shore up bad debt within the UK Mortage Industry.

But on Monday the FSA announced plans to ensure that strict vetting is to be brought into place and all incomes are to be verified, unlike previous self cert mortgages.

This can only be a good thing right? You should only borrow what you can comfortably afford to repay? I would think this goes without saying, but with so many of us eager to climb the property ladder has a little lie here and there really hurt?

Looking at the state of the UK’s financial markets today and subsequently its sub prime mortgage industry, I would agree that yes, and not before time.

The Woolwich, Northern Rock and Abbey have reduced their mortgage rates but at what price? Yes, respectively, they are offering rates of between 2.79% and 3.88% but only if you have a whopping 30% deposit.

Looking at it head on the reduction in UK mortgage rates is very competitive and very interesting,
the situation is slightly different when you look at the deposits required. All of the companies in
question would require new mortgage customers to lay down a 30% minimum deposit on their new home to
be able to discuss the lower rates announced today. So again another letdown in the UK mortgage
market with UK banks and UK mortgage providers accused of manipulating customers to increase demand before
reducing overall mortgage rates.

Without a reduction in UK mortgage rates there will be no recovery in the UK property market and ultimately
it will be a lose-lose situation for financial companies and property owners in the UK. When will UK banks
and UK mortgage providers wake up to this fact?

House prices in the UK continued to rise for a fifth consecutive month in September. But how easy is it to still obtain a mortgage?

The price of a typical home rose 0.9% in September to just under £162,000, which are broadly in line with prices in September last year.

In August, prices rose 1.4% from a month earlier and were 2.7% lower on the year.

Economists were expecting a 0.7% monthly gain and 0.3% drop in annual terms in September.

Much has been speculated with regard to the upcoming surge of ‘Accidental Landlords‘.The downturn in the housing market over the last two years has prompted many home movers to let their old properties out rather than sell.

The surge in so-called ‘accidental landlords’ has limited the supply of property in the sales market and increased the stock of homes available to let.

Over recent months the increase in ‘accidental landlords’ seems to have tapered off, which may indicate that some of this elevated rental supply is returning to the sales market, with possible negative implications for house prices.

The latest news on the UK mortgage market showed that despite the decreasing interest rates,
many borrowers are still unable to afford a Mortgage loan.

The majority of UK lenders are introducing new criteria along with decreasing rates.

For example, the HSBC has recently launched the a record-low mortgage of 1.99% which is great if you have a 40% deposit.

Of course, the deal might seem attractive to Brits moving homes or remortgaging, however, it leaves out
first-time buyers, who evidently cannot provide the bank with a 40% deposit.

The Bank of England kept the benchmark interest rate at 0.5 percent this month and extended its asset-purchase program to help pull Britain out of its worst recession in a generation.

U.K. house prices rose at their fastest pace in more than 2 1/2 years in August as low interest rates spurred demand and a lack of properties for sale underpinned values.

The increase in house prices this month was the fourth in succession, leaving them over 3 percent higher than at the end of 2008, according to a UK Building Society. In the three months through August, they rose by an average of 3.3 percent from the previous period, the most since February 2007.

Britain’s six biggest banks approved more home loans in July, a sample from the Bank of England’s lending panel showed on Aug. 20. U.K. mortgage approvals rose in July to the highest level since February 2008.

The average cost of a home climbed 1.6 percent, the most since December 2006, to 160,224 pounds. Economists predicted an increase of 0.5 percent, according to the median of 17 forecasts in a survey. From a year earlier, prices fell 2.7 percent.

The entire world began to feel a financial crisis in the summer of 2008. While some people claim to have predicted it to happen, and those of us working within the mortgage industry knew eventually the bottom would fall out, we do not think the world was ready for the rapid decline that happened.

It is a proven fact that banks are not lending money to individuals for mortgages at the level they were a year ago. In addition to a lack of lending, there are also fewer products available in the consumer mortgage market. The positive news for the short term is that those people who have a variable rate mortgage have seen their mortgage bill drop, as the Bank of England has currently set the rate at an all time low of 0.5%. While this is bad news for those hoping to earn interest from savings, it is positive news for those with a variable rate mortgage.

To make matters worse, the press and the media continue to harp on about the Credit Crunch. The media continues to print gloom and doom stories that do nothing more than paint the bleakest picture imaginable, no matter if they are factually true or not. The worst part of the situation is that consumer confidence is based around what is read in the newspapers and what is seen on TV. The media is one of the only ways that people not directly involved in the credit crisis gets information on the state of the economy. Misleading information can be the route of serious consumer doubt, which only hurts the economy more.