Mortgage approval levels hit fresh low
August 4, 2008
According to recent figures mortgage approval levels for new home purchases in June fell to a fresh low, exceeding the poor approval levels that were seen in May. The report showed that compared to May there was a further 23% drop in mortgage approval levels in June, with the number of approvals falling from 27,499 in May to 21,118 in June. The figures come from the British Banker’s Association.
Compared to June of last year the mortgage approval levels for this June reflect a massive drop of around 64%. There are a number of reasons why mortgage approval levels are thought to be falling. The onset of the global credit crunch resulted in lenders really tightening up on their lending criteria, and this has resulted in many people being unable to get a mortgage.
However, there are also other contributory factors, such as the falling house prices, which have put many people off from applying for a mortgage, because they fear that house prices could continue to fall once they have made the purchase.
The British Banker’s Association has stated that over the course of this year sale of properties could fall to the lowest level since the 1990s, which was the last time that house prices crashed. One official 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.”
The Royal Institute of Chartered Surveyors said: “The continuing lack of availability of mortgage finance is proving a major drag on the level of property transactions and is increasingly being felt in the real economy. The modest cuts in the costs of borrowing seen over the past few weeks will unfortunately provide little relief for first-time buyers.”
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