Credit crunch or confidence crunch?

New research from HSBC has found that 98% of potential housebuyers have no problem arranging a mortgage, but the home buying market is slowing sharply because people expect house prices to fall further and are not confident in their ability to fund a new property as the cost of living, including mortgages rises.

HSBC's study found that one in 10 Britons are keen to move house or get on the housing ladder, but have decided hold off for at least six months. Of these ‘delayers' just 2% said they had difficultly getting a mortgage, but 37% said they did not want to buy while prices are expected to fall further and 36% said they were worried about the rising cost of living.

Martijn van der Heijden, HSBC's UK head of mortgages said: "There is a perception at present that banks are not offering mortgages. In fact, our latest study suggests that access to finance is not a major issue. Instead, many buyers are taking a wait and see attitude, naturally some feel uncomfortable buying a home which may be worth less in six month's time.

"Almost one in four buyers think they might struggle to get a mortgage, however just one in fifty has actually given up on their purchase due to failing to find a suitable loan. Anyone keen to buy a home still has an extensive range of mortgage options. Lenders like HSBC, who have traditionally taken a responsible approach, have continued to lend at competitive rates and will continue to do so."

The study, which asked over 3000 UK adults of their home buying intentions over the next six months, set out to give clear insight into the motivations of Britons either actively looking to purchase a property or those keen to purchase, but no longer compelled to in the current unstable housing market.

The study highlighted two groups of households, those actively looking to make a property purchase and a second group keen to move but choosing to delay for at least six months. For those people moving, the ‘Investment of homeownership' is the primary reason given (26%) for going ahead with their purchase, suggesting that faith in long term house price growth is alive and well. For those who would like to move but can't or wont, ‘needing more space' is their top choice (29%), suggesting households in this position are prepared to make do with the space they currently have and sit tight until the market stabilises.

Britons looking to change their lifestyle are not being put off moving home by the current instability. Almost one in five (19%) people currently looking to buy give it as a reason for moving, however less than one in ten (7%) of people delaying their purchase gave it as their primary reason for wanting to move.

In contrast, the study confirms first time buyers are staying away from the property market for the time being, 18% of buyers are doing so to get their feet on the property ladder, whereas 24% of ‘delayers' claim to be first time buyers.

An indication of how HSBC has continued to help home buyers and remortgage customers over recent months can be seen in the bank's mortgage sales. In the first six months of 2008, HSBC saw its share of mortgage sales double, peaking in April and May where the bank was writing over £100m per day in new mortgages.

HSBC offers a range of competitive fixed and variable rate mortgages with the option to pay a fee or not.

For more information, visit hsbc.co.uk