The pile 'em high, sell 'em cheap days have gone

The scale of the collapse of the housing market was illustrated more clearly than ever when the Bank of England admitted net lending of 143 million was advanced in loans last month – down a staggering 95 per cent from July's figure.

Millions of consumers are facing the prospect of higher mortgage costs and lower savings rates after Britain suffered its third major financial collapse of the world banking crisis.

Financial experts said the government's decision to nationalise Bradford & Bingley was the final nail in the coffin of the "pile 'em high, sell 'em cheap" mortgage market. Analysts believe its demise will also mean an end to some of the country's most generous savings rates.

The shock figure for mortgage lending was the lowest since records began more than 15 years ago – and down 70 per cent on the same month last year.

Dennis Hall, the chairman of the London branch of the Institute of Financial Planning, said: "There is going to be significantly reduced choice for savers and mortgage-holders. The days of pile 'em high, sell 'em cheap mortgages have disappeared, while savers are going to have to wear out a lot more shoe leather to find good deals.

The number of mortgages approved for house purchase sliding to a record new low of 32,000. Hetal Mehta, the senior economic adviser to the Ernst & Young ItemClub, said: "The housing market is showing no signs of bottoming out."

Case Studies

'I think it's safe if you buy sensibly'

MONICA Gibb has bought two Scottish properties in the last few months.

In July, the River City actress finalised the purchase of a country cottage in Butterstone, Dunkeld, for around 220,000. And, last month, she bought a property to renovate in Bruntsfield in Edinburgh for 185,000.

Ms Gibb bought the two properties after selling her mid-market house in Newington, Edinburgh, at the end of July.

She said: "I sold my old house because I wanted a change of lifestyle. I fell in love with the Perthshire cottage but also wanted to keep a base, and part of my life, in Edinburgh.

"Both properties need absolutely everything done to them, but I love doing up houses, it's a real passion of mine. I've done up flats, cottages and houses before and both these properties need work done to them including new bathrooms, kitchens, windows, electricity, plumbing, absolutely everything."

Ms Gibb, who has just turned 60, didn't think the housing slump would greatly affect the price of her properties and decided to buy because the time was right.

She said: "I'm a great believer in property and think it's safe if you buy sensibly.

"Lots of people are moving and there are mortgages available. I know it depends on your personal circumstances, but for me the timing was perfect. I saw the cottage and just had a gut feeling. I wanted a change in my lifestyle and I'm very happy with the result."

'So lucky to have sold when we did'

KATE Clark, 46, and her husband David, 48, bought a four-bedroom house in Duthil near Carrbridge, Inverness-shire, in early August.

Having sold their four-bedroom house on an estate in the residential area of Cradlehall near Inverness city centre last November, the Clarks had been renting while they waited for the right property to come along.

Mrs Clark said: "We decided to move because the children are now in university and living away from home. We have been looking for about 18 months and when we found this property, we wanted to buy it straightaway. This was always our plan. As soon as the children became old enough, we wanted to find the right property and live in the country.

"The market we were buying in has not changed greatly. We sold our house for 295,000 last year. It would have been much more difficult to sell that property at that price now, so we are extremely fortunate to have done so when we did."

Their new property, a large country house, is half an hour outside Inverness where Mrs Clark works as a nurse. Mr Clark works within the property department of a retailer based in Edinburgh.

The Clarks also owned a property in Glasgow's West End, and sold that for 225,000 in May this year. Together with the combined sums, they bought their new house through Strutt & Parker.

Mrs Clark added: "This was our dream. We wanted a house in the country with potential to develop it. Both my husband and I absolutely love it."

'Managed to move before value fell'

GARRY Buchanan, and Maureen Whitson, both 37, sold their two-bedroom property in South Paisley at the beginning of June for 128,000.

They bought a three-bedroom semi-detached bungalow in Ralston in August for 191,000 and have just moved in.

Mr Buchanan, who works in computers and IT in Glasgow, said: "We wanted to move to a bigger property and the timing worked out well for us.

"We just needed more room than we had in our mid-terrace house.

"Now we have a bigger place, a bigger garden, an extra bedroom and generally more space.

"We also have a drive and a garage which we needed so the move has been good for us."

Mr Buchanan said they put their house on the market in January and were not too concerned about falling property prices.

He explained: "We managed to sell our old house fairly quickly, at least before the value dropped.

"At Christmas, the credit crunch hadn't affected the country as much as it has now and we just thought that it was best to sell before the value fell." He added: "We have got the new house for slightly less than we might have paid because of the slump.

"But in this area, the prices haven't changed as much as they have in the rest of Scotland and so we didn't want to wait to buy.

"The time was right and we wanted to move to this area – partly because of family reasons, but also we just needed to upgrade our property."