Mortgage Approvals Show No Sign Of Rising
The BBA’s latest figures on mortgage approvals show another drop. The lack of mortgage availability, together with the demand for higher deposits, plus high mortgage rates and arrangement fees are all blamed.
The latest data from the British Bankers’ Association (BBA) show that the number of mortgages for home buyers approved in June was just 21,118. That’s a 23% drop in a single month, 67% less than June 2007. The property market, says the BBA, is at its slowest since the property crash of the 1990s.
This figure from the BBA is regarded as a key indicator for where house prices may go next, and therefore gives little hope that the fall in property prices is about to be reversed. In fact, the number of mortgage approvals is the lowest since records began in 1997.
The Association, representing Britain’s High Street banks, said that £3.3bn of mortgages was approved in June – well below the six-month average of £5.9bn. Home purchase mortgages averaged £160,000.
Much of the reason for the slowdown in mortgage approvals has been put down to the fact that there are less mortgages available on the market, and the demand for higher deposits. If the banks want to boost the mortgage market, therefore, they know what to do!
With regard to remortgages, business has remained more stable. There were 59,637 remortgages in June at an average of £147,000. This is 5% down on May and 13.1% down on the previous year. Of course, many people remortgaging have little choice, or they could end up on a high interest standard variable rate.
The housing market continues to be in the grip of stretched affordability and tight lending conditions. Some leading lenders have made slight reductions in fixed-rate mortgages in recent weeks, as the swap rate has come down. However, it looks as though the corner has not yet been turned. Swap rates are creeping up again, and banks and building societies are showing a great reluctance to take the lead and revitalise the mortgage market.
For first-time buyers, the reduction in house prices should be good news. However, the demand for higher deposits, higher mortgage rates and higher arrangement fees are making it even tougher for them to join the market.
