The credit crunch continued to take its toll on the mortgage market in March as lending conditions led to a slump in buying and selling activity. According to the latest figures from the British Bankers' Association (BBA), mortgage lending declined in March, while mortgage approvals fell across the board.
The number of mortgage
approvals fell to 35,417 in March compared with 44,879 in February. Approvals were also down 46.2 per cent compared with March 2007 figures, while the average mortgage value rose 4.8 per cent year-on-year to £158,000.
The remortgaging sector, which has tended to show more resistance to turbulence in the money markets, also witnessed a decline in loan approvals, albeit to a lesser degree. Approvals for the remortgaging
sector dropped 7.9 per cent to 60,503 in March compared with the same month last year, with approvals down from 69,997 in February.
Approvals for equity withdrawal and other purpose loans fell 29.6 per cent year-on-year to 33,419. Mortgage approvals for this category were also significantly lower on a monthly basis compared with the 40,252 registered in February.
BBA statistics director, David Dooks, said: “The consequences of low banking
sector liquidity show up clearly in March data; reduced product ranges and tighter criteria resulted in slower mortgage lending and significantly fewer loan approvals."
Gross mortgage lending was just £16.6 billion in March compared with £17.6 billion in February. And mortgage lending fell 14.7 per cent compared with lending in March 2007. House purchase loans approved fell 43.7 per cent compared with March 2007, while the total number of mortgage loans approved declined by 22.5 per cent year-on-year.
Commenting on these figures, chief economist at the Royal Institution of Chartered Surveyors, Simon Rubinsohn, said: "The tightening in the credit crunch is continuing to take its toll on the residential property market with BBA data showing mortgage approvals at their lowest level since September 2000.
"The Bank of England's latest 'swap' arrangement with the banking sector should help provide a little more liquidity for lenders but is not going to turnaround the current challenging environment overnight."
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