Mortgage approvals fall to lowest level

Permalink: Mortgage approvals fall to lowest level
by Kay Murchie

Figures revealed by the Bank of England show that the slowdown in the UK housing market continues as mortgages for homebuyers slumped to a new low last month.

The number of new home loans approved for house purchases last month fell to 64,000 compared with 72,000 in February.

The Bank of England added that 98,000 re-mortgages were approved in March, compared to 109,000 the previous month.

Lenders have been tightening their lending criteria and the withdrawal of mortgage products has meant those re-mortgaging have been struggling to find a new mortgage.

Figures show there are just 4,100 different mortgage deals on the market, compared with 15,599 last July.

The figures come just one week after the British Bankers’ Association (BBA) said new mortgages approved for house purchases last month were 46% down on the same month in 2007 and the lowest monthly figure for over a decade.

Howard Archer, chief UK and European economist at Global Insight, said the bad news on the housing market just keeps on coming.

March’s very weak Bank of England data is yet further evidence that housing market activity is being severely hit by the damaging combination of stretched buyer affordability and very tight lending conditions, concluded Mr Archer.

Various housing indexes have revealed that property prices in the UK are continuing to fall during 2008.

Earlier this week, housing intelligence business, Hometrack, said the housing market is cooling fast and said property prices were 0.9% down on the year in April, after recording a 0.4% annual gain in March, this figure represents the weakest since January 2006.

Richard Donnell of Hometrack said the mortgage meltdown is resulting in a ‘buyers strike’ and households are in wait and see mode to see how events unfold.