BBA says level of mortgage approvals has slumped further
The British Bankers Association has recently confirmed that the level of mortgage approvals in the UK is still very low, with figures showing that compared to the same period last year the current level of mortgage approvals has dropped by a third. The low level of loan approvals has been put down to a number of factors, and this includes a slump in the housing market, expected property value falls, and tighter credit conditions resulting from the global credit crunch.
Officials from the BBA have stated that the number of mortgage approvals dropped by 33% in February of this year compared to February of last year, with around £43,870 being lent to home movers for the months – this did reflect a slight rise on January’s figure. The BBA also states that around half of the money lent out on mortgage approvals was for those refinancing to a more affordable mortgage rather than for property purchasers and home movers.
One BBA official said: "In an environment of tightening lending criteria, re-mortgaging, either to fix, re-fix, or reduce borrowing costs, has been a clear influence on mortgage data in the first two months of this year, resulting in mainstream lenders picking up market share." He went on to state: "Despite the relative pick-up in February’s reported retail sales, consumer credit cards in particular, continued to be subdued."
Furthermore the BBA is expecting mortgage conditions to keep getting tighter, as lenders increase stringency on lending criteria and buyers hold back from making a purchase in the hope that property prices and interest rates will fall further.
