Mortgage approvals down

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by Kay Murchie

Concerns over the state of the property market increase even further as figures from the Bank of England show 73,000 mortgages for home buyers were approved in February, down almost 10% on November last year.

UK lenders approved 246,000 mortgages in February, as the number of deals given the go ahead to homebuyers fell to the second lowest level on record. Furthermore, re-mortgaging approval levels also declined to 111,000 deals approved worth £14.4 billion after a recent good performance.

The figures demonstrate the reduction in mortgage lending, due partly to falling demand, with high prices driving away first-time buyers.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics), said as mortgage lenders stop lending and increases in interest rates, activity in the housing market will slow.

Howard Archer, chief UK economist at Global Insight, said the weak mortgage approvals data from the Bank of England confirm the housing market was already under major pressure from the dangerous combination of stretched affordability and tighter lending conditions even before the recent escalation of the credit squeeze.