Reduction In Mortgage Lending Figures
The effects of the credit crunch are making themselves felt throughout the mortgage and loan markets with yet another reduction in the figures for the number of mortgages which have been approved during the month of March.
The latest figures, which have been released by the British Banker’s Association (BBA) show that new mortgage approvals have dropped to their lowest level since September 1997. The actual number of approved mortgages was 35,417, which may sound like a large amount, until you consider that the figure was 43,147 during the previous month. When taken over the course of a twelve month period, this shows a reduction of 46.2%.
The same trend is also becoming apparent in the personal loan market. Whether it is for an unsecured or a secured loan, the overall number of applications that have been accepted has reduced significantly.
The main reason for these low figures is due to the lack of liquidity in the banking sector and wholesale money markets, or to put it another way, the Banks and other lending institutions simply do not have the available funds to lend. The other factor to consider is the tightening of lending criteria across the loan and mortgage market generally. Many individuals are now being rejected for loans due to their credit history, where twelve months ago they would probably have been accepted.
The Bank of England has attempted to relieve the pressure on the banking sector by injecting £50bn into the system during the course of April, in the form of Treasury bonds, which they hope will increase liquidity and help stabilise the market. The Royal Bank of Scotland and Halifax Bank of Scotland groups have also launched rights issues with their shareholders to raise £12bn and £4bn respectively.
