Fall in number of mortgage approvals for homebuyers
According to recent figures there has been a significant fall in the number of mortgage approvals for homebuyers. Recent figures have shown that mortgage approval levels for homebuyers have fallen by around 64% over the past year. According to officials from the Bank of England approval levels for homebuyers have dropped to levels last seen in the 1990s. For May there were just 42,000 new mortgage approvals for homebuyers, which was the lowest on record since 1993.
One leading economist from Global Insight described the situation as worrying, and said that the data was ‘…more very disturbing housing market data that add to already serious concerns over the likely depth and length of the housing market correction. Very low housing market activity seems certain to feed through to further depress already markedly weakening house prices.’
A number of similar reports comparing mortgage approval figures between this year and last year have showed a similar downward trend and there are a number of reasons why the level of mortgage application approvals seem to have fallen. This includes a lower level of applications due to would be buyers feeling cautious due to falling house prices, and also as a result of fewer mortgage products on the market and tighter credit conditions.
Officials have said that February is normally a fairly quiet time for mortgage activity, and yet the level of approvals for February of this year was still significantly higher than approval levels in May. It is thought that as tight credit conditions and reduce access to mortgages continue the situation and number of mortgages being approved for homebuyers could continue to fall further over the coming months.
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