Credit crunch easing, not over

The worst of the housing market downturn pressures may be easing, but conditions remain tough, economist Tony Alexander says.

Alexander’s latest survey of mortgage advisers was released yesterday, and he said it suggested the peak credit crunch period had been passed.

That was because a net 9% of advisers reported banks were more willing to lend funds, which was an improvement from June when a net 18% reported they were less willing to lend.

It was also a marked change from December when the Credit Contracts and Consumer Finance Act (CCCFA) lending rules came into force.

Back then, a net 93% of respondents said they were finding banks less willing to advance funds.

Alexander said it was the firmest result since June last year, but it was not yet strong enough to be able to say that bank willingness to lend had decidedly turned for the better. It was more that the period of their high unwillingness to lend had passed, and banks were signalling they were open for business with cashbacks now on offer, he said.

‘‘They probably have better systems in place, so they are not as worried about breaching the 10% speed limit on low deposit loans, and also feel more comfortable with how to apply the CCCFA rules.’’

But most advisers did not think recent changes to the lending rules would make much difference, especially for first home buyers whose biggest problem was getting a 20% deposit, he said.

‘‘Adviser feedback makes it clear that the banks’ rules are still tight, and it remains a very different lending environment to what it used to be.’’

Despite the tough environment, the survey also suggested the stepping back of first home buyers could be near an end. A net 7% of advisers reported fewer first home buyers were looking for financing advice, and that was an improvement on a net 12% in June and a net 75% in December.

Alexander said it was the best, or least bad, result since October last year, although there were still few solid signs that first home buyers were stepping forward in greater numbers.

But it was another hint the peak of the credit crunch, which was driven by tighter loan-to-value ratios, the CCCFA rules and rising interest rates, had passed, he said.

‘‘None of this is meant to imply the market is turning back up, but it does suggest that the worst of the downturn pressures may be easing.’’

The market has slowed significantly since its peak last year, and house prices have fallen, but experts have said it was normalising after the highs of the recent boom.