This article updates the analysis contained in the article 'Mortgage lending and the housing market', in the September 1982 Bulletin. Among recent developments:
- Housing finance has grown rapidly in real terms during the last four years.
- After the large-scale re-entry of the banks into the mortgage market in 1981-82, the building societies regained market share, and have increasingly shifted towards meeting mortgage demand using variations in interest rates rather than rationing.
- There has been a modest recovery in private sector housebuifding and over 600,000 dwellings have been transferred from the public to the private sector since 1980. House prices have recovered but have not risen as fast as in the 1970s.
- The increase in lending has nevertheless been more than sufficient to finance the total value of new private sector housing. The excess lending must have been used, directly or indirectly, for other purposes.