And those specifically to first time buyers reached a 10 month high, up 24% from May to 18,100.

Although the level of [...]]]> Mortgage lending jumped in June- allbeit from a very low level, the Council of Mortgage Lenders (CML) has said.The total number of new home loans to house buyers rose by 22% from May, to 46,700.

And those specifically to first time buyers reached a 10 month high, up 24% from May to 18,100.

Although the level of lending was still significantly lower than a year ago, the CML said the latest figures were encouraging.

“Recent increases in Bank of England approvals figures also show that more completions are expected in July, so the more encouraging numbers may persist for a while,” said Paul Smee, director-general of the CML.

The number of new mortgages arranged in June was back to the level recorded last October.

It was also 63% higher than in January this year, when newly arranged loans had been at their lowest monthly level for nearly two years.

Despite more first time buyers coming on the scene, they still had to put down an average deposit of 20% of the value of the home they were buying.

The CML said although this was down from the high point of 25% recorded during 2009, it was still much higher than the “historic norm” of 10%.

Potential buyers are also being helped by a fall in the interest being charged on new fixed rate deals.

The financial information service Moneyfacts said the average five-year fixed-rate deal was now at 4.99% – and that this was the first time since 1988 that such offers had been below 5%.

This has been due to the expectation that the Bank of England is unlikely to raise its bank rate above [...]]]> Interest rates on new mortgage deals have fallen to their lowest level for 23 years since 1988, according to new research.
This is due to lenders finding it cheaper to raise funds in the wholesale financial markets.

This has been due to the expectation that the Bank of England is unlikely to raise its bank rate above 0.5% anytime soon.

However most mortgage deals still require buyers to put down at least a 20% deposit.

The intra bank swaps rate determines the cost of borrowing for banks and building societies when they want to borrow longer term money in the financial markets at a fixed rate to lend onto their customers.

The market provides an indication of when banks expect the Bank of England to raise short term interest rates.

Until recently, a rate rise had been expected as soon as September.

But following a set of weak economic data, as well as the decision by a new member of the Bank’s rate setting committee to vote for no change in rates, markets now do not expect a rate rise until well into next year.

According to Moneyfacts, the average two-year fixed rate deal is now at 4.32%, three year fixed deals now average 4.92%, five-year fixes are at 5.29% and the average two-year tracker deal is now at 3.37%.

Interest [...]]]> The interest rates charged on fixed rate mortgages fell to a record low during May as lenders passed on reductions in their own funding costs to borrowers.
The average cost of a two year fixed rate deal dropped for the third consecutive month, falling by 0.19% to stand at 3.47%, according to the Bank of England.

Interest charged on tracker mortgages remained at their record low of 3.45%, while there was also a fall in the cost of five year fixed rate deals, with the cost of these now averaging 5%.

The downward momentum on mortgage rates appears to have continued into June, with a flurry of lenders slashing their rates during the past few days, including big names, such as Halifax, Nationwide, Lloyds TSB and NatWest.

The reduction in the price of fixed rate mortgages is being driven by a fall in swap rates, upon which the deals are partially based, as the Bank of England’s Monetary Policy Committee is widely expected to put off raising the base rate until the final quarter of this year.

There has also been a further improvement in the number of mortgages available to people with only small deposits, with 31 different loans now available for people with 5% to put down, up from 24 at the start of the year and the highest level since December 2008.

Choice for people with deposits of 10% has also risen to 244 from 199 during the same period, while there are now 545 mortgages available for those borrowing 85% of their home’s value, compared with 480 at the start of the year.

Mortgage rationing which has depressed UK property sales will stay in force until at least the end of [...]]]> House repossessions are likely to rise again next year the Council of Mortgage lenders (CML) has warned.
In its updated outlook for the property market, it says repossessions will probably rise from 40,000 this year to 45,000 in 2012.

Mortgage rationing which has depressed UK property sales will stay in force until at least the end of 2012 the CML says.

Sales this year will be even lower than it first thought, at 840,000, however they will recover next year to 900,000, a level last seen in 2008, the CML predicts.

But lenders will remain cautious about the size of loans they are willing to offer to home buyers.

“The aftermath of the global financial crisis continues to have a pronounced impact on mortgage and housing markets,” the CML said.

“Property transactions look set to remain at the low levels of the past few years. Lenders will continue to have only a modest risk appetite, and this will limit lending at high loan to value ratios,” the CML added.

Describing the UK as going through “a weak and patchy recovery”, the CML forecasts that:

• interest rates will probably stay at 0.5% for most of this year, rising only modestly in 2012.
• the number of borrowers classified as in arrears will rise to 180,000 this year, as originally forecast, and stay there in 2012.
• the number of homes repossessed will, as previously forecast, rise from 36,000 in 2010 to 40,000 this year, but will rise further next year to 45,000.

If this last forecast is borne out, it will take the annual number of homes being repossessed close to the total recorded in 2009.

But that will still be considerably fewer than the number seized by lenders during the recession of the early 1990s, when repossessions reached a peak of 75,500 in 1991.

“Despite the pressure on household finances, we expect the vast majority of households to keep up with their mortgage payments, helped by a relatively gentle trajectory for interest rates,” the CML added.

The CML’s latest forecast points out that demand from would be borrowers has been subdued in recent months because of the current squeeze on household finances, and the uncertain economic situation.

Many borrowers have faced the dilemma of [...]]]> The cheapest ever five year fixed rate mortgage deal was launched last week. This may prove tempting for home owners looking to protect themselves against interest rate rises.The loan, from ING Direct, allows home owners to fix the interest rate they pay at 3.69pc for the next five years.

Many borrowers have faced the dilemma of whether to stick with their current mortgage or move to a fix since interest rates were cut to unprecedented levels by the Bank of England.

Although their existing variable-rate loans may be very attractive at present, their monthly mortgage payments could rise steeply when rates go up. Switching to a fix will mean that these borrowers initially pay more, but their new loan could turn out to be the cheaper alternative after a few rate rises.

For example, customers of Cheltenham & Gloucester and Nationwide Building Society who are paying their lender’s standard variable rate (SVR) are enjoying interest rates of 2.5pc at present, well below even ING’s record-breaking offer. But if the Bank of England were to raise rates by two percentage points, this would be reversed.

However, given that no one knows when rates will start rising or how high they will go, how can borrowers decide whether they would be better off switching? And if they do decide to switch, should they do so now or can they enjoy low SVRs for a bit longer?

Anyone who would find much higher rates unaffordable should go for the certainty of a fix, advisers say. But for others it may be worth comparing how much you would lose if you switch to a fix unnecessarily, with the worst case of failing to switch and then being hit by rate rises.

But this may not apply if you have far cheaper mortgage rates – for example those lucky enough to to be paying 1.49pc on one tracker from the Woolwich – or for those who can’t access one of the cheapest fixed-rate deals, because they don’t have sufficient equity in their home.

It could be worthwhile doing the sums – or asking a broker to do them for you – for your own circumstances.

Of course, it is not a straight “either/or” decision. If rates do start to rise, people can still fix at a later date – however, expect the price of fixed-rate deals to have risen considerably in the interim.

If you do decide to fix, the next question is when to do it. Those on low rates will want to stick with their current deal until the last possible moment. The risk here is leaving it too late and seeing the best fixed-rate deals withdrawn, which will happen before the Bank of England raises official rates. So how can you tell when it is time to make your move?

No one can predict interest rates with certainty, even economists.

While there are many attractive mortgage rates around, qualifying can be hard as banks and building societies have made their lending criteria much tighter. But there are steps you can take, before applying for a mortgage, that could improve your chances of acceptance.

Larger homes in popular locations will [...]]]> Estate agents Savills predicts a 10 year downturn in house prices with some homes losing up to 15% of their value when inflation is factored into calculations.
Savills has warned that homes across the UK will drop in value by an average of 7.3% from mid-2010 to the end of 2011.

Larger homes in popular locations will slowly recover after that, but the agency said some categories of property – typically older flats and terraced houses in less popular areas of the country and in “secondary” parts of big cities – may drop much further in value.

In 2007 Savills’ researchers predicted the downturn and forecast a slump of 20% in prices.

It has now described 2010 as a “year of structural change” in the housing market and its research director, Yolande Barnes, has warned of a growing north-south divide and “a polarisation between equity haves and have-nots”.

She said average prices of all homes across the UK will only return to 2007 levels in 2016, making this a 10-year downturn. Even then, most will have still lost as much as 15% of their effective value when inflation is taken into account.

The firm said it now believes there won’t be a return to the heady days of large loan-to-value mortgages, so the number of people moving house annually may not rise much beyond the current 900,000 a year, which is little more than half the 2006 level.

However, the headline figures mask substantial regional variations.

While prices will rise 26% from their current level in the south-east of England by 2015, and by 18% in the south-west in the same period, the average increases in the north of England in the next five years will only be between 1% and 3%, keeping them well below their 2007 peak even before the effects of inflation.

Flats and houses in less popular areas, especially in the north of England, may drop in value substantially more, Savills warned.

“Owners here may be better off considering how much the homes may make on the rental market rather than banking on them increasing in capital value,” Barnes said.

Savills even thinks some so-called “doomster” analysts who have calculated UK homes to be over valued by as much as 30% could turn out to be accurate, at least in regard to some types of property in certain locations.

Although they had to put down an average [...]]]> First time buyers’ share of the mortgage market fell to its lowest level for three years in July, according to new figures.
The proportion of new mortgages taken by first time buyers fell to 34% of all loans granted to home buyers, the Council of Mortgage Lenders (CML) said.

Although they had to put down an average deposit of 24%, low interest rates have helped affordability.

The number of mortgages advanced to house buyers increased to 56,000 in July, up 7% on the previous month, the CML said.

This was also 6% up on the same month a year ago.

But the group said that although there had been a seasonal uplift, the market remained “very weak” with loan criteria having tightened.

“Lending criteria remain tight, underpinned by caution on the part of both borrowers and lenders in the light of continuing economic uncertainty,” said CML economist Paul Samter.

When asked about the chances of getting a mortgage at the start of 2010, many potential first-time buyers said they were having to get financial help from their parents to afford a deposit.

The picture has changed little for them since. The average deposit of 24% in July was much the same as the average since the start of 2009.

There was a slight dip in demands – with the average deposit at 21% in April and May this year – but later in the summer “loan criteria have now tightened a little”, the CML said.

Low interest rates mean that mortgage interest payments account for a “modest” 13.2% share of average – the lowest since early 2004, the group’s figures show.

But this has not translated to the proportion of new loans going to first time buyers.

Their 34% share of the mortgage market was down from 38% in June and the smallest percentage since the middle of 2007, just before the onset of the credit crunch and the international banking crisis.

The record difference between average mortgage rates and institutional money market costs or ‘swap rates’ is said to add £149 a month [...]]]> UK mortgage rates are falling, but lenders may not be passing on the reductions.Banks and building societies are imposing record profit margins on mortgages, despite falling house prices and lending levels, independent statisticians claim.

The record difference between average mortgage rates and institutional money market costs or ‘swap rates’ is said to add £149 a month to homebuyers’ bills on a £150,000 mortgage.

By contrast, the stock market does not seem to think banks are profiteering or have a licence to print money – as bank shareholders know to their cost.

The Council of Mortgage Lenders claims that homebuyers are benefiting from low interest rates.

The CML said gross mortgage lending reached a total of £13.6bn last month, a 5 per cent increase on £12.9 billion in June but down 3 per cent on £14bn in July 2009. It claims that the new data suggests lending remains on track to meet the CML’s revised forecast, published earlier this month, of £140bn for the year as a whole.

But fears of a double dip recession mean lenders are reluctant to advance new mortgages to many potential borrowers.

House prices are likely to continue to drift down while the stand off between fearful borrowers and lenders continues.

Most homebuyers will be able to sit out this period of stagnation in the housing market without too much trouble – unless unemployment and/or interest rates rise sharply.

While there is little or nothing most of us can do about either macroeconomic trend, homebuyers can insulate themselves against higher costs.

Brokers report a sharp increase in demand for fixed rate mortgages rather than variable rate loans. Fixed rate deals now account for 60 per cent of advances compared to 45 per cent at the start of the year.

Interest payments accounted for 13.2% of their income, the lowest since March 2004 but finding a large deposit is still a stumbling block for many,

In [...]]]> With the Bank of England’s interest rates at record lows homeowners’ mortgage payments are also low.
First time buyers are benefiting from relatively cheap rates- if they could raise a significant deposit.

Interest payments accounted for 13.2% of their income, the lowest since March 2004 but finding a large deposit is still a stumbling block for many,

In May, first time buyers typically borrowed 75% of the value of the property, at an average of 3.14 times their income.

Taking the average house price from the Land Registry in May, this would put the cost of a 25% deposit at £41,328.

At the start of the year, the CML predicted there would be £150bn of mortgage lending in 2010.

It now describes that forecast as “a little optimistic”.

Rates charged on [...]]]> The cost of fixed rate mortgages fell to a new record low during May as competition continued to return to the market, official figures show.
The average interest rate charged on a two-year fixed-rate deal for a borrower with a 25pc deposit dropped to 3.8pc during the month, according to the Bank of England.

Rates charged on the loans have been falling steadily since last September, when they reached 4.47pc, and they are now at their lowest level since the Bank’s records began in 1995.

There was also a fall in the cost of five-year fixed-rate mortgages for people borrowing 75pc of their home’s value, with this dropping to 5.39pc from 5.5pc in April to stand at their cheapest level since May last year.

Tracker mortgages also got cheaper during May, with the rate dropping to 3.7pc from 3.79pc in April.

But despite the increase in the number of mortgages available, falling rates and a slight loosening in lending criteria, lending levels have been subdued since the beginning of the year.

Cold weather and the reintroduction the old stamp duty threshold of £125,000, at the end of 2009, produced a slump in sales and lending at the start of the year.

That [...]]]> In March the number of people trying to sell their homes hit its highest level since May 2007, the Royal Institution of Chartered Surveyors (Rics) said.

Cold weather and the reintroduction the old stamp duty threshold of £125,000, at the end of 2009, produced a slump in sales and lending at the start of the year.

That led to a dip in prices in February, put at 0.1% by the house price report from the Department for Communities and Local Government (DCLG).

But this now seems to have passed.

Rics said in March new instructions from sellers had outstripped enquiries from would-be buyers for the third month in a row.

Activity is expected to rise over the coming months, but at a more subdued pace, meanwhile, prices are expected to more or less stabilise over the coming months
Royal Institution of Chartered Surveyors

Price increases were still more common than price falls across the UK, but the surveyors’ body predicted prices would stabilise in the next few months

The latest monthly Rics survey indicated that prices during March had dropped in East Anglia, Yorkshire & Humberside, the north of England, the West Midlands and Northern Ireland, but had continued to rise strongly in London, the South East and Scotland.

An apparent shortage of properties for sale has been cited by most commentators as the main reason for the surprising rise in house prices, which started in spring 2009.

Although the precise scale of the rebound is disputed, with different figures being generated by different surveys, there is little doubt that the recent trend has been upwards.

Reflecting the low level of completed sales since the start of the year, Rics said the average number of sales per surveyor had dropped from 18 in the previous three months to 17, but predicted that the market would pick up.

“Activity is expected to rise over the coming months, but at a more subdued pace, meanwhile, prices are expected to more or less stabilise over the coming months,” Rics said.

This was the third consecutive monthly fall and came after a sharp drop the previous [...]]]> Mortgage approvals fell in February marking a continued slow start to the year in the UK housing market, Bank of England figures have shown.

The number of mortgages approved for house purchases dipped by just over 1,000 to 47,094, the figures showed.

This was the third consecutive monthly fall and came after a sharp drop the previous month when the end of the stamp duty holiday hit the market.

Various studies have indicated the housing market was hit at the start of the year owing to the end of the temporary stamp duty relief and the freezing weather.

Figures from the British Bankers’ Association and now the Bank of England suggest this downturn has continued.

The Bank of England’s figures showed the number of mortgages approved for house purchases was lower than the average of the previous six months, which stood at 55,130.

This was down 21% on the recent peak in approvals in November, and the lowest for nine months.

In the Budget, Chancellor Alistair Darling said that, for the next two years, first-time buyers purchasing properties worth up to £250,000 would pay no stamp duty.

He also proposed an increase in stamp duty on properties worth more than £1m, although this would not come in until April 2011, well after the election.

The Bank of England’s figures showed the number of people remortgaging increased in February to 27,297, a rise from January and ahead of the monthly average over the previous six months of 25,985.

The average interest rate charged on one of the deals dropped to 3.63pc from 3.92pc during the month, the lowest level since Bank of England records on the product [...]]]> Tracker mortgage rates fell to a record low during January as competition continued to return to the mortgage market figures from the Bank of England show.

The average interest rate charged on one of the deals dropped to 3.63pc from 3.92pc during the month, the lowest level since Bank of England records on the product began in 1997.

There was also an improvement in the cost of fixed rate mortgages, with two-year loans falling to an average of 3.97pc, a level last seen in July 2003, while the cost of a five-year deal dropped by 0.12pc to 5.55pc.

Competition in the mortgage market has been steadily improving since the beginning of the year, with more than 300 new mortgage products launched during January, while a flurry of lenders also cut their rates on existing deals. 

Tens of thousands of home owners could struggle to remortgage when their current deal comes to an end, if strict new mortgage regulations are enforced. Under proposals published by the Financial Services Authority this [...]]]> The new red tape will make it harder to get a home loan. We examines the options for home owners and buyers.

Tens of thousands of home owners could struggle to remortgage when their current deal comes to an end, if strict new mortgage regulations are enforced. Under proposals published by the Financial Services Authority this week, lenders will be required to impose tough affordability tests to determine whether borrowers should be approved for a mortgage.

As a result, many home owners may find they can no longer access the best fixed-rate or tracker-mortgage deals. Worst hit are likely to be the self-employed, first-time buyers and buy-to-let investors – many of whom could see competitive mortgage deals dry up. 

The drop in house prices since the peak in the market two years ago means it is now cheaper to get a foot on the property ladder than to pay rent to landlord.

Buyers could [...]]]> First time buyers are financially better off buying a property rather than renting because of falling house prices, according to new research.

The drop in house prices since the peak in the market two years ago means it is now cheaper to get a foot on the property ladder than to pay rent to landlord.

Buyers could save as much as £624 over the next year alone by switching their tenant status to one of home owner.
 

Northern Rock is increasing the maximum LTV to qualify for its best rate from 65pc to 70pc, reducing its rates and also cutting the £995 arrangement fee for all residential purchases (but not remortgages) to £595.

The cheapest two-year fix for purchases [...]]]> UK mortgage interest rates drop as more lenders, including Northern Rock and Woolwich make cuts.

Northern Rock is increasing the maximum LTV to qualify for its best rate from 65pc to 70pc, reducing its rates and also cutting the £995 arrangement fee for all residential purchases (but not remortgages) to £595.

The cheapest two-year fix for purchases comes down by 0.34pc from 4.09pc to 3.75pc.

It has also made a 0.5pc reduction in its two-year buy to let (BTL) fixed rates. The rate to 60pc LTV is down to 5.49pc and the rate to 70pc to 6.09pc, both with an unchanged 2.5pc fee.

Meanwhile, the Woolwich today launched two best buy tracker mortgages as it continued to focus on expanding its share of the mortgage market.

The group is reducing its lifetime tracker for people with at least a 30pc deposit by 0.45pc to 2.79pc.

The deal, which charges a £999 fee and has early redemption penalties for the first two years, is the lowest available for home owners looking to borrow up to 70pc of their home’s value.

The group, which is part of Barclays, also launched a lifetime fee-free tracker mortgage at 3.19pc, also for people with a 30pc deposit.

Tracker mortgages are becoming increasingly popular with consumers as economists predict the Bank of England base rate will remain low for longer than previously thought. They are also generally lower than fixed rate deals at the moment.

Interest rates are near historic lows but borrowers looking for a low-cost loan could find it difficult to get a good deal.

Last year, around 1.3 million people took out a loan in order to consolidate other debts, but [...]]]> If you’re having trouble securing a low cost personal loan or mortgage, then try rewriting your credit history.

Interest rates are near historic lows but borrowers looking for a low-cost loan could find it difficult to get a good deal.

Last year, around 1.3 million people took out a loan in order to consolidate other debts, but lenders are still cautious when it comes to offering credit, so rates on personal loans remain stubbornly steep. However, improving your credit history could save you hundreds of pounds in interest by increasing your chances of getting better borrowing rates.

Across the personal loans market as a whole, the average loan rate has increased from 9.04pc to 9.08pc in the past year.

Borrowers not only face higher rates, but the number of personal loans available is dwindling. There are currently 36 personal loans available to consumers, compared to 57 loans this time last year – a drop of 37pc.

The best rates will only be offered to those whose financial behaviour shows they are unlikely to default on their debts. Everyone has a credit rating, which is basically an assessment of how likely we are to miss payments on a loan or other credit arrangement. So, if you have been late making loan payments, this will have a negative impact on your credit history and will mean lenders may be reluctant to let you borrow from them.

Lenders will also look at the number of credit searches carried out on you in recent months, as well as the length of time you have been with your bank. According to credit reference agency Equifax, they may also focus on how long you have lived at your property and the length of time you have been with your current employer.

To find out if there are any black marks on your credit history, you need to take a look at your credit report. Under the Consumer Credit Act, you can write to one of the credit reference agencies, such as Experian or Equifax, and ask to see your file for a cost of £2. Alternatively, if you need to see your report in a hurry, you can check your file online.

Credit Expert from Experian offers a free 30-day trial, which enables you to see your credit report, and then charges £6.99 a month for continued access. Equifax’s Credit Watch Gold service also offers a 30-day free trial and charges £69.99 for the rest of the year, but these can be cancelled once you have seen your report.

You can improve your credit history in several ways. Make sure you are registered on the electoral roll and, if possible, make more than the minimum payment on credit agreements every month. You should also always close any old credit card accounts, even if they show a zero balance, as lenders will take these into consideration when working out how much credit to give you.

Be wary of making lots of applications for loans, too, as these will show up on your credit record. Certain websites have online tools available to help ensure you don’t end up applying for deals that you won’t be eligible for.

If it is a credit card rather than a personal loan you are after, then Confused.com has a tool which enables customers to see how likely they are to be accepted for the cards offered on its site. Again, this leaves no credit footprint.

The rate at which banks lend to one another, known as the London InterBank Offered Rate, dropped further this week, [...]]]> UK banks’ borrowing costs edged towards the same level as the Bank of England interest rate yesterday, the first time since before the credit crisis as the profits lenders profits make on mortgages continues to increase.

The rate at which banks lend to one another, known as the London InterBank Offered Rate, dropped further this week, reaching 0.57. It has fallen gradually from double that amount at the beginning of July, hitting a new low almost every day.

At the same time, the Bank of England has kept interest rates on hold at 0.5 per cent and experts suggested Libor is just days away from falling to the same level.

But while lenders are enjoying a low cost in wholesale borrowing, banks are refusing to pass on the savings to borrowers, with customers paying an average of 3.8 per cent on a two year tracker.

It prompted experts to call for lower borrowing costs to be made available to home buyers.

Figures show the difference between three month Libor and the average two-year tracker was 0.29 per cent at the beginning of the credit crunch in August 2007.

It has risen to 3.21 per cent, according to the research by personal finance website Moneyfacts.co.uk.

The margin has risen sharply during the financial crisis as lenders charge more for a mortgage amid fears that home owners will default on their loans.

Traders said that the bulk of the buying came after a confluence of bullish chart signals triggered speculative flows into the precious metal.

In early morning trading in London, spot bullion traded [...]]]> Gold prices on Tuesday hit a fresh six month high above $1,000 a troy ounce, as investors continued to worry about the re-emergence of inflation.

Traders said that the bulk of the buying came after a confluence of bullish chart signals triggered speculative flows into the precious metal.

In early morning trading in London, spot bullion traded as high as $1,005, up 1 per cent on the previous day. It is the third time that gold has moved above $1,000 since March 2008, when it hit a record high of $1,035. In New York, gold futures for delivery in December rose to $1,004 an ounce.

Gold has attracted investors since the collapse of Lehman Brothers last year as an insurance against the financial crisis, but also amid concern that the extraordinary steps taken by central banks to prop up the global economy could lead to higher inflation in 2010.

Hedge funds that made money last year by betting against the survival of Wall Street banks, including David Einhorn’s Greenlight Capital and hedge fund Paulson & Co, have bought gold this year as a way of betting against the ability of central banks to steer the world out of crisis without triggering inflation. Their strategies have drawn in more investors.

At the same time, retail investors have bought record amounts of bullion coins. The US Mint sold from January to August about 838,500 ounces of the popular American Eagle gold coin, up from 446,000 ounces in the same period of 2008.

The dollar’s recent slide against other currencies has helped underpin gold. Nevertheless, traders and analysts are doutbtful about the prospects of a substantial rally in the gold price beyond $1,000 an ounce because of lacklustre jewellery and industrial demand.

Jewellery demand for gold, traditionally the backbone of the bullion market, sank to a 5½-year low in the second quarter of 2009 due to global economic recession. High local prices in India, the world’s largest jewellery market, also weighed on demand, which fell 31 per cent to 88 tonnes in the second quarter, while demand in Turkey, another key market for gold jewellery, dropped 54 per cent to 19.2 tonnes.