Mortgage approvals drop for second consecutive month

Fri, 05 May 2017

Mortgage approvals drop for second consecutive month
March saw a drop in mortgage approval rates despite lenders improving the deals available to borrowers.

The news comes after a similar fall was experienced in February.

Bank of England figures show that there was a 1.6 per cent decrease on the previous month, with a total of 66,837 mortgages being approved.

There was also a decline in the number of remortgaging loans approved in the month.

Currently, a price war is being fought between lenders, with a number of new low-rate mortgage deal being introduced in recent weeks.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "With HSBC launching the cheapest five-year fix on the market at 1.69 per cent and Yorkshire Building Society introducing a record low two-year discounted rate at 0.89 per cent, the market is more competitive than ever.

"It is a good time for borrowers, with lenders keen to attract business from first-time buyers, home movers and those remortgaging. However, affordability criteria remain tight."

A previous report has found that the "Bank of Mum and Dad" is the 10th largest mortgage lender, due to the increasing reliance on parental financial support. Insurer Legal and General suggest that a total of £6.5bn will be lent by parents this year.

The figures from the Bank of England also show that consumer credit, including overdrafts, credit card borrowing and personal loans, have continued to grow.

The 12 months to the end of March saw a rise of 11 per cent in loans and over drafts, which has led to the Bank of England and financial regulators stressing the need for "vigilance."

Jane Tully, director of external affairs at the Money Advice Trust, the charity that runs National Debtline, said: "While most people will cope with this borrowing for the moment, if the economy does worsen over the coming months there is a significant risk that many who have taken on this extra commitment could start to struggle."
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