Monday, 18 June 2012
No recovery for the UK property market
UK banks have fallen out of love with property. Since Spring 2007, the number of mortgage approvals has fallen by around 60 percent. At the height of the bubble, banks approved around 120,000 mortgages a month. In May 2012, they approved only 50,000.
If the UK economy is going to recapture those glorious pre-crisis, then the Bank of England is going to have to engineer some debt-fueled economic growth. That means that Banks will have to double up and start approving more mortgages.
The BoE has just put together a scheme that rewards faster credit growth with lower interest rates. It sounds like a great idea; what could possibly go wrong?