Mortgage Numbers Down, But Is The Worst Over?
Figures from the Bank of England show that mortgage approvals in June were almost 70% down on last year. Land Registry figures show a 1% fall for house prices in June. However, mortgage rates have been cut by several lenders, so maybe there is a chance the market may pick up again soon.
The latest mortgage numbers from the Bank of England show a fall of nearly 70% year-on-year to June for loans for home purchases. Just 36,000 new mortgages were approved in the month, and that is the lowest figures since records started being kept in 1993. From June 2007, when 114,000 mortgages were approved, this is a 68% drop.
Traditionally June is one of the strongest months of the year for homebuyers, but the number is half the figure of 72,000 recorded for February – usually one of the quietest months of the year.
Experts commented on a ‘staggering’ decline in the market. A falling market in mortgages usually means that house prices will follow in the same vein. Further indications are that agreed house sales are very low and buyer interest has not yet been revitalised; houses are taking longer to sell, and sellers are having to lower their asking prices to achieve a sale.
Figures from the Land Registry indicate that annual house price growth was more or less flat in June at 0.1%. The monthly fall in June was by 1% to £180,781 for the average house.
Economists have been blaming the lack of available mortgages on the market for the decline in the property market. Lack of mortgages has in turn been blamed by the banks on the lack of funding in the mortgage market. Since the credit crunch took hold, almost a year ago, mortgage debts sold as asset-backed bonds have dropped considerably. The amount of lending on residential properties in June was half what it was in June 2007.
If the lack of mortgages, together with their high costs, has been holding the mortgage market back, and then in turn the property market, then the recent cuts in mortgage rates from the likes of Halifax, Abbey, Woolwich and Cheltenham & Gloucester should help to turn the markets round. It may be a couple of months before the figures begin to have an effect, but maybe the worst is over.
