InTheNews.co.uk
Breaking News:
Your source for news

Money Story

 06 September 2008 03:35 BST

Bank puts mortgage approvals at 15-year low

Tuesday, 29 Apr 2008 10:28
Mortgage lending in Britain at lowest since 1993, Bank of England says

Free brochures 

The Bank of England has admitted that UK mortgage lending has fallen to a 15-year low.

The new lending to individuals report released today by the Bank finds mortgage approvals for house purchases were limited to just 64,000 in March.

This was the lowest level since the Bank of England began keeping comparable records in 1993, and down from 72,000 in February and a 2007 peak of 115,000 seen in both May last year.

Some £6.9 billion net lending was secured on dwellings during March, with £1.429 trillion now outstanding across the UK as a whole.

A further 98,000 loans were issued for remortgaging, while 57,000 were issued for all other purposes – both of which were also lower than in February.

"The news mortgage approvals dropped to a record low of 64,000 is hardly surprising given that lenders have been aggressively scaling back on the provision of finance to home buyers," commented Simon Rubinsohn, chief economist of the Royal Institution of Chartered Surveyors (Rics).

"Indeed, it is improbable the bottom of the cycle has yet been reached given the latest announcement that Nationwide is following the lead of other lenders in requiring new borrowers to now put down at least a ten per cent deposit to secure a mortgage.

"This is set to intensify the already significant pressure on first-time buyers."

The historically low level of mortgage lending has also been hit by slowing demand for houses prompted by ongoing affordability pressures facing potential house buyers.

Some £1.2 billion was also provided in unsecured lending to consumers during March.

This again was below the figures from February, when £2.3 billion was lent.

Credit card borrowing amounted to £369 million over the month, while other loans and advances climbed by £868 million in March after jumping by £2.0 billion in February.

The annual growth rate of consumer credit rose by 0.2 per cent points to 6.7 per cent; the three-month annualised growth rate rose by 1.4 per cent points to 8.6 per cent.

"Going forward, we expect that consumer borrowing will be limited by tightening lending conditions, while consumers are likely to be increasingly keen to rein in their borrowing," commented Howard Archer of analysts Global Insight.

"Rising debt levels, low household savings rates, lower equity prices, and higher mortgage and borrowing rates for a number of people mean that there is a pressing need for many consumers to improve their finances," he concluded.End of story


More money news... 

Also In The News 

© 2004- 2008 www.inthenews.co.uk. Advertise | Privacy | Terms of Use