Home Property UK mortgage approvals tumble as consumer credit shrinks

UK mortgage approvals tumble as consumer credit shrinks

by LLP Editor
29th Jun 20 9:14 am

The number of new mortgages approved in the UK has slumped again, as the Covid-19 pandemic continues to grip the economy.

The Bank of England has reported that the number of mortgage approvals for house purchase fell to just 9,300 in May, down from around 15,800 in April.

This is almost 90% below the February level, and around a third of their trough during the financial crisis in 2008.

This is the lowest level since comparable records began (in 1997), the Bank adds. Economists had expected an increase, to around 25,000 new mortgage approvals.

Approvals for remortgage have also fallen, to 30,400, over 40% lower than in February.

Hina Bhudia, Partner, at mortgage broker Knight Frank Finance: “The Bank of England data reveals the unprecedented impact of the property market shut down when many surveyors were unable to visit properties to conduct valuations in-person.

“Leading indicators suggest lending has been picking up since May, but it’s clear there is still a long way to go before many borrowers experience anything resembling pre-pandemic conditions.

“A two-tier mortgage market has emerged in recent weeks as lenders have become more averse to risk, and have largely withdrawn from higher loan-to-value lending ahead of the wind up of government support schemes this autumn.

“This means the market remains particularly challenging for first-time-buyers, the self employed, or anybody that relies heavily on commission or bonuses to top up their income.

“The picture is completely different for borrowers with larger deposits of 15% or more. They have much wider access to finance at historically low interest rates, and have underpinned a surge in activity as the property market bounced back to life.”

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