Mortgage approvals for homebuyers plummet

The level of mortgage approvals for homebuyers has plummeted over the past year according to recent figures, with data showing that the number of mortgages approved for new homebuyers over the past year has fallen by 64%. The figures come from the Bank of England and show that approval levels are now lower than they were during the housing crash of the early 1990s. In May just 42,000 mortgages were approved for homebuyers, and this is the lowest on record since 1993.

February is usually one of the quieter months for mortgages and May one of the busier months, yet in February 71,000 mortgages were approved for new homebuyers compared to the 42,000 for May. The global credit crunch, tighter credit conditions, and falling house prices all continue to play a part in the approval of mortgages as well as on new applications made by consumers for mortgage loans.

An economist from Global Insight, Howard Archer, said that the news 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.’

The number of remortgages taken out in May also fell compared to April, falling from 100,000 in April to 90,000 in May. The figures relating to new mortgage loans from the Bank of England are similar to those from the British Banker’s Association, which recently showed that mortgage approvals for May were down by 56% on the previous year. Many think that the situation will continue to get worse, as the global credit crunch and tighter credit conditions continue to take their toll.

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