Drop in mortgage approvals for May
According to a recent report released by the British Banker’s Association, mortgage approval levels for May slumped this year, falling to the lowest level on record. The figures show that the number of mortgage approved in May fell to under 28,000, and this was a drop of 20% compared to April. The May figure was around 56% lower than the same month last year, and is indicative of the huge problems that have hit the mortgage sector following the inset of the global credit crunch.
One economist who saw the figures described the whole situation as a worrying one, stating: ‘The BBA data graphically highlight that housing market activity is currently being throttled by stretched affordability and tight lending conditions.’
Another industry official added: ‘As the rates on offer increase, so does the relative risk. More and more borrowers are likely to find the increased repayment too much to bear.’
He continued: ‘These are continuingly worrying times for anyone coming to the end of their current mortgage deal. However, it seems not all is lost as there could be some light at the end of the tunnel for borrowers. Today, Swap rates have decreased from the 6.52% high last week, by 0.16% to 6.36%. We hope that this recent downturn is not short lived and trust that lenders will play a fair game by reflecting this decrease in the rates that they will have on offer in the next few weeks.’
Recent Bank of England figures have also backed up this data, and there are concerns that the situation could get even worse as a result of fewer applications stemming from consumer concerns about falling house prices, and the tighter credit conditions that have come into play as a result of the global credit crunch.
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