Mortgage Approvals Continue To Fall In May
2 minute read
Instability continues to reign across the UK’s property market. A seemingly permanent London housing boom which must be destined for a bust, a Help to Buy scheme on and off the table and now the news that, for the third month running, mortgage approvals have dropped.
Who does this affect?
This lack of finance is not only troubling for first time buyers, but also poses a problem for seekers of adverse credit mortgages and mortgages at the more substantial end of the spectrum which are considered to be higher risk.
The numbers are stark and paint a problematic picture for a housing market which seemed to be back on the road to recovery. In April, British building societies and banks approved just 62,918 mortgages. This is the lowest rate of mortgage approval since July 2013, despite a hopeful looking peak of 75,838 in January 2014. Since the start of the year, mortgage approval rates have dropped month on month.
- View the Bank of England’s latest statistics here: http://www.bankofengland.co.uk/statistics/documents/mc/2014/apr/moneyandcredit.pdf
- Catch up on the British Bankers Association figures from late May: http://www.bbc.co.uk/news/business-27587181
It’s not all doom and gloom
But there’s a silver lining to this apparent clammed-up cloud. Despite mortgage approvals dropping, gross mortgage lending (which indicates the total amount lent to borrowers) hit its highest point since August 2008 this April.
Bottlenecks and selectivity
Despite approvals dropping, it appears that lending to mortgage seekers is still steadily growing, albeit on a more selective basis. One reason for the approval drop is thought to be “a bottleneck” of applications which has led to approvals falling, while lending levels remain high.
Another possible factor is increasingly tight rules surrounding mortgage lending. Potential lenders must now be absolutely scrupulous when approving mortgages, delving into the borrower’s financial history, quizzing them about current spending habits and ensuring that they will be able to meet repayments even in dire straits.
If you’re seeking an adverse credit mortgage and this news causes you concern, Just Bad Credit may be able to help. We work with mortgage-seekers who suffer from adverse credit, helping them to access finance for their home on their terms. To learn more talk to our team on freephone 0800 9777840 today.