Whilst there has been a lot of talk about ‘green shoots’ in relation to improvement in the economy, financial markets, and property sector over recent weeks, a report that was recently released by the Bank of England indicates that thousands of mortgage applications a month are still being turned down by UK lenders.

This is despite measures taken by the government to try and improve the mortgage market and get financial institutions to start lending again.

The data that was released last month by the central bank showed that around sixteen thousand mortgage applications a month were being turned down by banks.

The figures also showed that whilst in December only twelve thousand applications a month were being refused by lenders, this has rocketed to around sixteen thousand since March of this year. It was the first time that the Bank of England had released such figures, and officials from the central bank said that banks were still being very stringent over lending and being very careful about who they were prepared to lend money to.

First time buyers in particular have been hard hit by the problems in the mortgage market, and many have been frozen out of the market altogether. With lenders being increasingly fussy about taking risks and demanding higher deposits from all borrowers including first time buyers, there is little to no hope for many of the people that may have been hoping to get onto the property ladder.

There have also been problems for existing homeowners who want to refinance their mortgage loan in order to take advantage of lower interest rates, with the base rate now at 0.5 percent, but many of these homeowners have also been refused.

One industry expert stated that the way in which lenders were looking at applications had changed over the past eighteen months due to the financial climate and increased fear of taking risks. He said: ‘It’s much harder for homeowners to be accepted. We’ve seen a complete reversal in the way that mortgage lenders do business. Where before they were looking at reasons why they should grant you a loan, today they are looking at reasons why they shouldn’t.’

Officials from the Council of Mortgage Lenders also doubted that there would be any sigificant imminent recovery, stating: ‘While recent signs from the housing market have been more encouraging, we do not anticipate a significant recovery in activity in the coming months. Lending volumes appear to have stabilised at extremely low levels, but the weak labour market and lenders’ limited access to funding will constrain activity for some time yet.’

The CML also went on to state: ‘Underneath the headline gross lending figure, it’s likely that a moderate improvement in house purchase lending in May has been offset by very low remortgaging volumes as borrowers stay with existing deals. While recent signs from the housing market have been more encouraging, we do not anticipate a significant recovery in activity in the coming months. Lending volumes appear to have stabilised at extremely low levels, but the weak labour market and lenders’ limited access to funding will constrain activity for some time yet.’








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