"Consumer spending was flat in May after the boost Easter and the Royal Wedding provided in April. Money is still tight and people continue to pay off debt rather than save or borrow.
"Companies in general are holding back on investment or expansion based on bank finance until the economic climate improves."
David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains said:
“While lenders must be taking some short term comfort from the affordability of mortgage repayments while rates remain at rock bottom, it also makes it hard for lenders to pump money into the housing market. Many mortgage borrowers are currently using the opportunity provided by low rates to pay down their mortgage debt, which is largely why only £1.2bn more money went into mortgage loans than was paid back in May. Far from giving lenders reason to open the financial floodgates, low interest rates make it harder for lenders to boost the property market through new mortgage lending because so much money is being repaid.
“Ultimately, the housing market requires lending to speed up before the property prices will begin to grow again and that cannot happen until lending levels at higher loan to value rates pick up enabling first time buyers to start buying in volume again. House prices are not set to rise in the short term and this also creates uncertainty but those taking a longer term view of the housing market will know by looking back that inevitably prices will rise in the longer term.
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