Member Article

Mortgage levels hit 15 year low

The number of mortgage approvals in the UK fell to their lowest levels in 15 years, according to a report into high street banking.

In June 51,610 mortgages were approved worth £6.5 billion, the lowest ever recorded by the British Bankers Association since it began to measure lending levels in September 1997.

These figures included 26,269 approvals for house purchases worth £4.2 billion - the lowest figure since 2009. Approvals for house purchases were 20% lower than the same period in 2011.

14,000 re-mortgaging applications were approved worth £1.9 billion, much lower than the long run average of almost 20,000.

The Diamond Jubilee Bank Holiday and impact of the poor weather are believed to have affected the weak figures, alongside a poor borrower appetite for borrowing in the “subdued” housing market.

In recent months lenders have tightened their borrowing criteria, whilst also raising rates for borrowers and more than a million existing one due to the weak economy.

Commenting on the figures, British Bankers Association statistics director said: “Public holidays and wet weather put a damper on mortgage approvals in June and demand for unsecured (non-mortgage) borrowing was also low.

In June mortgage payments were also found to have outstripped lending for the first time, after net mortgage lending fell by £70 million.

June figures indicated that mortgage lending increased by £342 million, although the report also showed that a fall in lending levels and a rising trend in people paying down their mortgages while rates remain low has see the significant increases in net lending disappear.

Speaking to the Telegraph, Ed Stansfield, chief property economist at Capital Economics said: “This is the best guide to the level of active housing demand and, potentially, a signal of the short-term outlook for house prices.

This was posted in Bdaily's Members' News section by Ruth Mitchell .