Homebuyers down by a third in just one year

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by Kay Murchie

The uncertainty continues in the housing market with new figures showing mortgages for homebuyers are down by one third during the last year.

Figures from the British Bankers Association have established that 33% fewer loans were approved by its members for house purchases last month compared with the same month last year.

43,870 mortgages totalling £7 billion for homebuyers were approved last month, down on the six-month average of 47,402 and £7.4 billion.

As a result of the global credit squeeze, banks have been hit with liquidity problems. The Council of Mortgage Lenders recently announced that members were struggling to find funds to meet demand. Furthermore, the National Association of Estate Agents said potential homebuyers were at the lowest level for 20 years.

Many lenders have been forced to reduce their product ranges, increase their mortgage prices and, in some cases, to reduce their lending capacity.

Earlier this week, Chelsea Building Society made the unusual move of stopping all its products being sold through brokers until the end of the week while still selling the mortgages direct, as it was unable to meet demand.

However, demand for re-mortgaging has increased. The BBA said 10% more re-mortgages in February than the same month a year ago, with 72,193 taken out – down on the 79,926 in January but above the 65,202 six-month average.