Tuesday, 14 October 2008

UK Mortgage approvals down over 60 percent

It is important to keep a sense of perspective about the credit crunch. It is not the case that credit has dried up completely. In August, banks handed out over 40,000 mortgages to people buying homes.

Banks have simply tightened up their lending criteria. If you want a mortgage today, you better convince the bank that you can pay them back. That means a big deposit, some credible proof of income and a house purchase that doesn't leave you crushed under a ton of debt. In fact, the credit crunch is really a return to prudent old fashioned banking.

The really worrying thing about the credit crunch is that sustainable economic growth in the UK seems to be inconsistent with responsible banking practices.

5 comments:

josh said...

Debt to the UK economy is like air to the rest of us. It needs it to survive.

dearieme said...

Is that new mortgages to cover new purchases, or does it include replacement mortgages?

Alice Cook said...

Dearieme

It is not remortgage activity, which now accounts for over 50 percent of all mortgage lending. It is new lending for home purchases.

Alice

dearieme said...

Thanks, A.

Anonymous said...

The problem here isn't so much that we need silly credit to grow so much that we lack sensible government which understands that its role is to be minimalist and as small as possible.

What we instead get is big government, which is a huge parasite on the British Economy, which since the end of World War 2 has never been all that much of a powerhouse. So, a government here should really be doing its absolute best to leech as little money from the economy as possible, and keep as many people in work as possible by making the dole payments for non-workers as stingy and miserly as it can get away with.

Instead what we get is Big Socialist Government, which drains an incredible amount of money from the economy, and needs moronic inflation measures to fund its money habit, temporarily at least.

So, we swing from spendthrift socialist to reforming Tory, and never get the chance to see what minimalist Libertarians could do, since they never get a look in.