The current Euro Zone crisis plaguing Brussels affecting nations such as Greece, Spain and Italy may have outreaching consequences for the mortgage market and the mortgage broker.
It is feared that mortgage lenders are likely to ‘pull in their horns’ after the latest crisis, with fears of a double dip global recession causing significant worry throughout the UK and abroad.
Although a €109bn aid package was agreed by the Euro Zone members to help bail out Greece on Friday, uncertainty still clearly remains within the wider mortgage industry and for the mortgage broker. With many aid contributions to Greece likely to come from private aid contributions, the fragility of a number of Euro Zone economies continues to remain a worry for lenders and is also likely to trickle down to the consumer. Despite the stock market starting to recover after days of certainty, many economists and mortgage specialists are unwilling to see a certain financial future for the Euro Zone yet.
After we reported that Nick Clegg last weekend feared the economic crisis within Spain, Italy and Greece spreading to UK shores, consumer confidence and even mortgage lender confidence is likely to decrease. Clegg had claimed to be ‘incredibly worried’ and with even further uncertainty surrounding the United States’ financial position, the world could be about to enter economic meltdown once more.
With comparisons being drawn to the previous economic crisis triggered by the failure of Lehman’s in September 2008, there is worry that the UK mortgage market may suffer a partial freezing along the lines of September 2008 where the housing bubble burst. Although there is no housing bubble which has built up available to burst this time, the consequences seen for the UK, the EU and wider could be catastrophic.
However, the difference between this crisis and the previous crisis of 2008 is that the Banks and Building societies have seen this crisis coming for some time. Banks and mortgage lenders have been able to plan for economic crisis, meaning that the impact and effect seen is unlikely to be as contagious or perhaps as far reaching. The mortgage broker and mortgage industry can only hope that the market does not fall once more.