Mortgage approval levels plummet in one year
September 5, 2008
Over recent months, since the onset of the global credit crunch, the number of mortgage approvals in the UK has been falling. Mortgage approval levels have been affected by a number of factors, and this includes the tighter credit conditions put into place by lenders, which has made it hard for some people to get mortgage finance, and a lower level of applications from consumers, who are unable or unwilling to buy in the current climate.
Officials from the British Banker’s Association have recently stated that over the course of the past year mortgage approval levels have actually fallen by around two thirds. This is a combination of lenders tightening their eligibility requirements and cutting back on lending levels, as well as consumers putting in fewer applications due to the current state of the housing market. This combination has had a profound effect on mortgage approval levels, as the BBA figures show.
The number of new loans approved in July of this year was down by 65% compared the July of last year, although it was a slight 5% rise compared to the number of new loans approved in June of this year.
A BBA official stated: “There has been this decline in the number of loans approved in the last six months. It is down to a very quiet housing market and partly driven by people not wanting to borrow in the context of house prices falling.”
Another BBA official said: “The monthly numbers of approvals for house purchase, which have fallen by some two-thirds over the last year, levelled off in July. It would, however, be premature to think that the housing market will now start to recover, because overall approval activity continues to be very low. The pressures on household budgets are reflected in the relatively weak rise in individuals’ deposits and with consumer borrowing growing only slowly it seems that consumers are acting prudently.”
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