Mortgages are harder than ever to come by

In March the number of new mortgages approved for house purchases fell to their lowest level since January 1999, when current records began, according to the Bank of England.

[UKPRwire, Sun May 11 2008] In March the number of new mortgages approved for house purchases fell to their lowest level since January 1999, when current records began, according to the Bank of England.
Only 64,000 new mortgages were approved in March, which was 44% down on the figure for the same month last year, and down from 72,000 in February.

A week before, data from the British Bankers’ Association (BBA) showed a drop of 46.2% from March of last year, the lowest figure since its records began in 1997.

Given the reduction of financing offered to homebuyers by lenders, these figures do not come as a surprise.

Lenders have been withdrawing mortgage deals and raising rates this year, as a result of the global credit crisis which has drastically reduced the financing available to lenders for their mortgage products. This credit crunch, which was triggered by problems in the US housing and subprime market, has been passed on to the high street with the result that consumers are finding it much more difficult to make a house purchase unless they have a sizeable deposit at the ready.

The Bank also reported that the number of loans approved for remortgaging had fallen, standing at 98,000 in March – down 11,000 from the previous month – as had the number of loans for other purposes, such as buy-to-let, which was down by 6,000.

In contrast to the drying up of the mortgage market, credit card and other lending (such as through loans and overdrafts) increased from February to March.

Though the Bank of England recently announced a ‘special liquidity scheme’ whereby lenders can swap risky mortgage debts for government bonds, lenders have still continued to withdraw mortgage offers for new customers and have warned that rates could continue to rise in the short term. Most recently, Nationwide announced that from May 1st all but two of its mortgage offers would require a 10% deposit.

In an effort to increase its share of the mortgage market, the Royal Bank of Scotland, which includes NatWest, has bucked this trend and is cutting all its tracker and fixed rate mortgages, by 0.1% and 0.3%, as well as offering a cash-back deal for first-time buyers.

“The March figures reflect both the tighter lending conditions and the reduced affordability of consumers,” said Lawrence Smith of Decision Homebuyers. “With mortgages much harder to come by, only those with a significant deposit are in a position to take advantage of the lower house prices.”



For press enquiries, please contact Phil Rendall on 020 7099 9026
Email: phil@dhbuyers.co.uk
Web: www.decisionhomebuyers.co.uk

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