Monthly fall in mortgage approvals speeds up

Permalink: Monthly fall in mortgage approvals speeds up
by Lin Freestone

According to figures released by the Bank of England, the number of new house purchase mortgages approved in April 2008 was 58,000.

This is the lowest number since the bank started recording the figures in 1993, and 8% fewer than the March total.

For twelve consecutive months, the amount of money offered to borrowers, and the number of loans approved, has fallen. This trend is expected to continue, at least for the short-term.

These figures for April suggest that the fall in the number of successful mortgage applications will be greater than that predicted by the Council of Mortgage Lenders and the Royal Institution of Chartered Surveyors.

Their research indicates that property sales in 2008 would fall by between 35% and 40%, unless the market picks up towards the end of the year.

Although the demand for mortgages has fallen back since the summer of 2007, the reduced availability of funding has been the dominant factor behind the dramatic fall in the number of mortgage approvals.

Consumer confidence has weakened and household budgets have been squeezed by rising food, fuel and tax bills.

It is to be hoped that the Bank of England’s special liquidity scheme, announced in April, will improve the liquidity of banks and will lower the current high level of wholesale money rates relative to the bank rate.