I know that the real estate market is not exactly booming in the U.S., but I was reading an article the other day about the market in the U.K. that really shocked me.

Apparently, mortgage loans dropped 95% between July 2008, and August 2008. That’s not a misprint, they dropped 95% in a single month. It gets even scarier when you look deeper into the figures. Home loans are down 98% year on year, with only £143 million in new loans in August. To give you some background the U.K. has a population of approximately 61 million people, and the median home price is £161,000 (approx $290,000).

The U.K. housing market is about 12 to 18 months behind the market in the U.S., so the worse is still to come. So the next time you start to think how bad our market is, just remember there is somewhere that is worse off than we are.

At the start of this month, Fannie Mae changed its policy regarding declining markets. Previously if you were in a declining market you had to put 10% down in order to obtain a loan. Now the policy has changed so that regardless of the state of the local real estate market buyers only need to put 5% down, i.e. they can obtain a 95% mortgage instead of a 90% mortgage. This change will obviously make it easier for first time buyers to enter the market and hopefully create an increased demand at the low end of the market.