Further Reductions In Home Loan Approvals
The total number of mortgages and home loans which have been approved by a lender have fallen once again over the course of August, according to the latest figures from the Bank of England.
The figures show that there were 32,000 new loans approved for home purchases in August, 64,000 remortgage cases and 39,000 loans for other purposes, such as debt consolidation, capital raising and home improvements. All these figures are below those for the month of July and show a significant drop on the number of loan approvals for the same period last year, particularly in specialist lending areas such as self certification and bad credit loans.
A spokesman for the Royal Institute of Chartered Surveyors (Rics) said “At 32,000 the number of mortgages approved for new purchases this August stands at a whopping 70 per cent below year ago levels. Within this, the collapse in the contribution of specialist mortgage lenders is particularly stark. In August 2007 they made 27,000 new loans, this August, they made just 2,000. It is also significant that net mortgage lending during the month actually stagnated, reflecting the recent precipitous decline in approvals.”
The reasons behind these figures are two fold. Firstly, mortgage lenders and other loan providers are still imposing much tighter lending criteria than they were at the same time last year, following the credit crunch, which means that a large number of potential borrowers are unable to be accepted for the loan they require.
Secondly, there is still a distinct lack of confidence in the housing and mortgage loan markets amongst consumers who are aware of lending restrictions, have seen house prices steadily falling over the course of the year and are generally concerned over the short term future of the economy, with the probability of a recession looming.
