However, as a recent report has indicated it is not all good news and at present the future for the mortgage sector is still very challenging for both lenders and borrowers.

Figures showed that in August of this year mortgage lending increased by £1 billion, and major banks approved over 80 percent more mortgages than they did in the same month of the previous year, indicating that there was some improvement being seen in the market. A number of banks over recent weeks have declared that they are putting more money aside for lending, which could improve consumers’ chances of getting finance.

However, according to some industry officials some lenders, such as smaller banks and building societies, are struggling to put aside more money to lend in the form of mortgages, mainly because they are failing to attract custom from savers due to poor savings interest rates, which means that they have inadequate finances to back up their mortgage lending activities.

This means that lending is still restricted for many, and one mortgage website official said: “Demand is strong, but there are plenty of people who remain frozen out by the banks. We’ve seen record numbers of visitors to our site over the last couple of months, yet we know that tight lending restrictions will prevent many responsible borrowers from gaining finance. Before we see any change of pace in recovery, lenders must become more reasonable in their lending criteria.”

Mixed news on mortgage lending is a post from: Glitec Loans

It was revealed in a recent report that even the most credit worthy consumers may find that it takes months to secure a suitable mortgage, and this has been blamed on banks holding onto their cash in order to bump up their financial reserves, which is effectively brining the housing market to a grinding halt.

Industry experts are now stating that banks are being too restrictive with their daily mortgage lending levels, adding that banks were putting daily lending limits into place and once these limits had been reached they were turning down other customers for loans even if they had five star credit ratings.

These customers were then forced to wait weeks on end for more cash to be made available before being considered again for mortgage finance.

Experts added that often demand was so high for these loans compared to the availability of cash that often those than went to a lender after 10am were being turned away because there was no cash available.

One expert stated: “It used to be just those with a poor credit history would find it difficult to obtain a mortgage. But now there’s no guarantee that five-star borrowers will get a deal because lenders are restricting the amount of funding available. It’s a fresh blow to Britain’s middle-classes which are already dealing with rising unemployment and repossessions.”

Another industry official added: “It is bad news for consumers that mortgage deals are only appearing in the window for such a short period. There are now only a limited number of cheaper deals available and before the consumer has chance to look at them a second time, they are gone.”

Banks ‘choking’ the housing market is a post from: Glitec Loans

However, despite the increase in mortgage lending levels the figure is still only around half the average that it was three to four years ago according to officials from the BBA.

In June 35,235 mortgages were approved, and this was an increase from the 32,000 that were approved in the previous month. The value of money advanced for mortgages also increased, rising from £2.4 billion in May to £2.6 billion for June. BBA officials said that several years ago mortgage approval levels stood at an average 55,000 per month, so although the figure has increase there is still a long way to go.

An official from the BBA said: “Numbers of new home loans approved by the high street banks are recovering from the very low level last November and so far this year, gross mortgage lending has topped £50bn. People are showing little appetite for unsecured borrowing and are generally keeping more money in their accounts.”
One economist said: “The big picture is that activity is rising from an extremely low base and, therefore, has much further to go before the floor for house prices is reached. With unemployment rising and credit conditions still tight, that may take some time.” Another official added: “Some have suggested that things are finally beginning to pick up, but I don’t buy it. From where I’m standing, the next few months are still going to be exceptionally difficult for borrowers and this will only change once the lenders begin to lend – and they’re still not lending at levels sufficient to drive a sustained recovery in the property market.”

BBA reports increase in mortgage lending levels is a post from: Glitec Loans

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.’








Thousands of mortgages each month being turned down is a post from: Glitec Loans

The increase in mortgage approval levels for the month resulted in the highest level for thirteen months, and officials from the British Banker’s Association said that it was a sign that banks were finally starting to relax the stringent lending regulations that have come into place since the onset of the global credit crunch.

The month of May saw 31,162 mortgage approvals for new house purchases according to the BBA, and this was the highest level since the early part of 2008. Compared to the month of April of this year this also reflected an increase of around 7 percent.

However, the overall amount of money that was lent out by banks actually fell even though the number of new mortgage approvals increased. Net lending for June was around 37.7 billion, and this was the lowest level since February 2001.

An official from the BBA said: ‘Steady monthly increases since last November have seen the number of loans approved for house purchase recover to levels seen in early 2008, although gross and net mortgage lending show a subdued wider mortgage picture. However, unlike much of the mortgage market, the high street banks are still seeing lending growth and improved mortgage availability is reflected in higher average loan approval values.’

Another industry official said: ‘It does appear at least after a traumatic 18 months that some level of balance has returned to the market. However, it would be a dangerous game to read too much into these latest figures. On the one hand, it is an encouraging sign that mortgage approvals are at their highest level for 13 months. However, remortgage levels continue to fall which suggests people are still playing the waiting game where fixed rates are concerned.’

New home loans at highest level in over a year is a post from: Glitec Loans

The figures were released by the Bank of England, and showed that in all around sixteen thousand mortgage applications are being turned down by lenders each month, as the ongoing recession and the global credit crunch continue to take their toll and affect lending levels.

Around twelve thousand mortgage applicants a month were being turned down in December of last year by UK mortgage lenders, but since March this has increased to around sixteen thousand since March of this year, with lenders becoming increasingly stringent as the recession wreaks havoc in the jobs market and the economy.

The Bank of England has not released figures such as these before, and the date has shown just how particular lenders are becoming when it comes to who they will accept for credit.

One mortgage broker expert stated: ‘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.’

Another industry official stated: ‘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 Council of Mortgage Lenders stated: ‘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.’

Thousands of mortgages a month being turned down by banks is a post from: Glitec Loans

This figure was also 58 percent lower than the same month last year, showing how steeply mortgage lending levels have fallen over the past twelve months.

The CML data also showed that although there had been an increase in lending to those looking to buy a home there had also been a sharp drop in lending for those that were looking to refinance their existing home mortgage loan with another provider.

However, on a brighter note there has been evidence from a number of leading lenders that the house price falls may now be slowing down and the market could be close to bottoming out.

One economist from the CML stated: “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. 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.”

The Bank of England also commented on the trend, stating: “The major UK lenders reported an increase in approvals for mortgages for house purchase in May. And there are some indications that mortgage availability has increased over the past month. However, lenders have highlighted a number of frictions that might delay the effect on completed housing market transactions and mortgage lending.”

Mortgage lending fell back in May is a post from: Glitec Loans

The British Banker’s Association has recently stated that the rate of decline in mortgage approvals for the months fell at its slowest in almost two years.

The BBA has said that the encouraging data could indicate that the mortgage and property markets are starting to stabilise to some degree after experiencing heavy declines over recent months. In March the number of mortgages approved came to 26,671.

However, this increased slightly for the month of April to 27,685. This meant that the year on year decline was 15.5 percent, which is said to be the smallest annual decline since August of 2007.

However, despite these figures some industry officials have said that the recovery of the property and mortgage markets is still a long way off, and that lending conditions were still very tight even through the base rate had fallen to the rock bottom level of 0.5 percent.

One industry expert said: “The improvement is from such a low base and the fact that approvals haven’t really increased at all this month is a worrying signal of credit conditions.”

Another economist agreed that the pick up in the property and mortgage markets was set to be a gradual one, stating: “The data reinforce our belief that the pick up in housing market activity will be gradual and fitful for some time to come given ongoing very poor economic fundamentals and still tight credit conditions.”

Increase in mortgage approvals for April is a post from: Glitec Loans

The figures have been released by the Bank of England, and show that in Britain there was a higher than expected increase in mortgage approvals for house purchases for the month of February. The number of mortgage approvals for the month increased to 38,000, which was up from 32,000 mortgage approvals for the month of January.

It is thought that many people may be showing increased interest in the market as a result of lower house prices and rock bottom interest rates, and a number of industry groups such as estate agents have reported that buyer enquiries have increased over recent weeks.

However, not all of these enquiries are necessarily converting to sales, according to the Royal Institute of Chartered Surveyors, although these latest approval figures do indicate that there has been an increase in the number of enquiries that are converting to actual sales.

One industry official said: “February’s household borrowing figures suggest that housing market activity may finally have turned a corner. However, approvals have a long way to go before they get to levels that are no longer consistent with falling house prices – in fact they need broadly to double.”

However, RICS officials have said that there are still problems that must be overcome, stating: “Accessibility to the market still remains a problem, with many first-time buyers struggling to find the necessary deposit. While it is likely that the numbers of mortgages being approved will continue to edge upwards over the coming months, the level of activity will still remain low by historical standards.”

Mortgage approval levels increase in February is a post from: Glitec Loans

Mortgage approval levels have now averaged 31,000 for the past six months according to the central bank, suggesting that the slump in mortgage lending may have reached its peak. However, approval levels are still at just half the level they were at a year ago.

Amongst the problems that would be buyers are experiencing in the mortgage market at present is the high level of deposit being demanded by lenders, which many simply cannot afford.

One official said that the “disconnect between buyer enquiries and actual mortgages approved highlights the inability of many buyers to access the property market at the present time because of the substantial deposits being sought by lenders. Subsequent announcements by both Northern Rock and RBS indicate that a little more funding will flow into the mortgage market over the coming months but as things stand, this will only boost the available finance by in the region of 10% compared with 2008.”

Another industry expert said that first time buyers were really suffering at present, stating: “Once again the number of deals available for those with a 10% deposit has fallen and with the average fixed rate today standing at 6.31%, they are far from competitive. In comparison, someone with a 40% deposit can get an average rate of 4.84%. First time buyers… are meant to be the lifeblood of the property market, but at the moment there is no incentive for them to get on the first rung of the property ladder.”

Mortgage approvals held steady for January is a post from: Glitec Loans