Mortgage News Mortgage Approvals At A Record Low 1956

Mortgage approvals at a record low

24 July 2008 / by Rebecca Sargent
Mortgage approvals have fallen once again; as lenders tighten their criteria and house prices fall, potential buyers are biding their time before swooping in on a crashing market.

According to the British Bankers’ Association (BBA), mortgage approvals for house purchases totalled just 21,118 in June, more than 6,000 fewer than in May, and 67 per cent less than this time last year. Total gross mortgage lending was also down from £5.9billion in May to £5.1billion in June, a difference of five per cent.

The news comes as no surprise to experts who have been predicting a housing market stand-still since the credit crisis began. Those looking to remortgage have clearly been more successful with lenders as remortgage figures remained relatively static.

Statistics director at the BBA, David Dooks, said: “Another record low number of mortgages approved by the banks for house purchase means that the whole market is likely to be at its least active since the early 1990s. However, even in this rapidly slowing market, net lending has still grown by 12 per cent over the past year and there continue to be significant numbers of people remortgaging with the banks.”

Meanwhile, the BBA statistics also showed that consumer borrowing continues to rise, albeit at a slow pace, new spending on credit cards has risen by two per cent between May and June, but this does reflect the lowest amount of purchases since July 2007. Borrowing on overdrafts has fallen for the ninth consecutive month and the number of unsecured loans remains subdued as consumers tighten their belts ahead of a potential recession.

Mr Dooks added: “The pressure on household finances is being reflected in subdued consumer borrowing, with spending on cards lower than of late and borrowing on personal loans and overdrafts being comparatively weak.”

Statistics recently released from the National Association of Estate Agents (NAEA) coincide with the BBA’s figures, showing that the number of people on agents’ books looking to buy property fell in June to 226, down from 247 in May. The NAEA research also showed that estate agents sold an average of just six properties in June.

NAEA member, Martin W. Brownsord said: “We have found a rather rapid slowing of the market over the last month or so with significantly reduced viewers around and very few applicants in a position to proceed without selling first. As a result offers are becoming increasingly hard with what they put forward.”

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Written by Editorial Team