The range of different mortgages available through high street lenders has plummeted to just 3,281, a three-quarters drop from the July 2007 peak of 13,000, according to Moneyfacts.co.uk.
Analysis of house price data from Nationwide Building Society shows that RPI-adjusted prices also peaked in July 2007, though the peak in nominal prices was October 2007.
The two are not disconnected.
The absence of bank-to-bank lending, the inability to securitise mortgages and the spike in interbank interest rates has both reduced mortgage choice by 75pc and resulted in numerous lenders withdrawing from the marketplace, some even going bankrupt. Those lenders left standing are only willing to lend to people with good credit and a big deposit.
Without cheap and easy credit chasing high-risk borrowers, property prices could do only one thing … Collapse. Figures from both Nationwide and Halifax show a year-on-year decline of more than 12pc. Meanwhile, the Bank of England reports that new house purchase mortgages plunged to a historic low of just 32,000 in August.
Whilst both credit and criteria remain tight the housing market has little hope of recovering. In fact, stabilisation is the best that can be hoped for and a U-shaped recession would now be considered a lucky escape compared to the L-shaped depression which is threatening to make an entrance.
This means, for those with cash or impeccable credit, cheap properties will continue to be available for the foreseeable future and, if you can find them, there are plenty of bargains still to be had.
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