Mortgage approval rate hits new low

Thu, 01 Jun 2017

Mortgage approval rate hits new low
Home loan approvals have fallen to their lowest level since last September, as fixed mortgage rates drop to new lows.

According to the Bank of England, there were 64,645 mortgage approvals over the course of April, which represents a drop of 2 per cent compared to the previous month.

Mortgage lenders have said that, despite the low rates available to borrowers, the demand for mortgages has fallen drastically.

It is theorised that this decrease in mortgage approvals is fuelled by the recent tax changes, with landlords bringing purchases forward to avoid these. From 1 April, the amount of tax relief they could claim on mortgage payments was reduced.

The figures from the Bank of England also suggest that there continues to be difficulties for savers, in terms of getting a decent return on their savings; the interest paid on ISAs has hit a record low, with an average of 0.39 per cent.

At the same time, the rate of consumer credit growth, which includes loans, overdrafts and credit cards, stayed at a shade over 10 per cent in April. Authorities have once again stressed the need for vigilance over the rising unsecured debt levels.

Jonathan Sealey, CEO of Hope Capital, commented: "Although approvals for house purchase and remortgaging fell slightly in April, this was to be expected, considering the snap general election and ongoing Brexit uncertainty. However, it's promising to see that gross mortgage lending in April was higher than the six month average, suggesting that the UK's housing market has once again remained steady.
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