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Mortgage Approvals Fall

Recent figures from the Bank of England reveal that mortgage lending within the UK has dropped on a like for like basis during the month of April. The Bank’s findings showed that there was a drop of eight thousand mortgage approvals compared to the month of March.

Despite the fall, these figure are still in line with the year-to-date average, with the net increase in April running at eight and a half billion pounds, which itself is below that of the previous month.

The figures suggest that the previous months of above inflation rises in house prices are beginning to show their effect on the market, making the purchase of property simply too expensive for many people to take on, especially first-time buyers who are facing a worryingly high first step onto the property ladder.

With the average house price for first-time buyers now sitting at a level in excess of £150,000, the deposit that they have to raise is now around the twenty four thousand pound mark – it’s easy to see why this market is being hit hard, and why increasingly first time house buyers are having to rely on help from parents or other relatives in order to raise this large deposit.

Mortgage lending is not the only area to see a reduction, consumer borrowing is also seeing something of a slowdown, a slowdown in growth that is, as consumer credit is still on the rise, albeit at a reduced rate of growth compared to a few months ago.

A decline in mortgage approvals, if sustained, could well lead to a reduction in house prices, whether this will be the case in the near term remains to be seen, but if it does occur it is likely that the prices will only see moderate decreases, such as were seen in the final quarter of last year. With the current state of the housing market, even a small reduction would fuel higher interest in buyers, which would make the prices stabilise themselves again.