House purchase mortgage approvals fell to a four-month low in April, numbering just 45,166 – almost exactly half the usual level. It is the lowest April figure since records began in 1993.
The fall reversed the improvement in March to 47,145 and is the lowest number of approvals since December, when they were at a 21-month low of 42,859.
Remortgaging approvals also fell in April, to 28,091 from 31,201 in March, and were lower than the monthly average of 32,534 for the previous six months.
Howard Archer, chief European and UK economist at IHS Global Insight, said: “Mortgage approvals may have been held back to a limited extent in April by the extra bank holiday for the royal wedding and by the later Easter. Even allowing for any impact from those factors, though, mortgage approvals are clearly very low compared to long-term norms.
“Mortgage approvals have actually averaged around 90,000 a month since 1993, while a level of 70,000 to 80,000 has in the past been considered consistent with stable house prices.
“On balance, we believe that house prices are likely to end up declining by some 10% overall by mid-2012 from their 2010 highs. This implies that they will fall by around 5% to 8% from current levels, depending on which house price measure you take.”
According to the Building Societies Association, mortgage approvals by building societies in terms of value came to £1.73bn in April – 14% up on April last year, but a fall of £2.15bn on March.
Adrian Coles, director general of the BSA, said: “The number of transactions and the level of mortgage lending are likely to remain low until economic growth recovers and consumer confidence returns.”
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Comments
Gooders: "ok you tell me to cut my coat accordingly..... so i want a 2 bedroom house close to where i work (S.E)....this is not exactly the Zonda of housing aspirations is it !!" No - but is it ESSENTIAL that you have a two bedroomed house? What about a 2-bed flat, or a one bedroomed, for that matter?
"I earn above average salary but simply cannot afford such a house along with other essentials." Define "essentials", please - and I mean ALL things you class as "essential"...
Wardy and Ray you are dillsuional..... Asking prices ARE the problem, ok you tell me to cut my coat accordingly..... so i want a 2 bedroom house close to where i work (S.E)....this is not exactly the Zonda of housing aspirations is it !!
I earn above average salary but simply cannot afford such a house along with other essentials.
@Hampshire Agent
Not everywhere is there a seriously falling market and in my view, I am not alone in this, within a couple of years prices will start gradually rising.
Read my words "on a properly assessed LTV"
I could afford a new Pagani Zonda if only those pesky Italian super car manufactures priced their cars correctly. It’s an outrage.
@Ray Evans
Why on earth would you expect banks to be keen to lend 90% at a rate of 4%?
90% in a falling market is asking for trouble, they have to keep more on deposit as a result so they whack on a decent premium. All pretty sensible really.
It is NOT clear that all asking prices are the problem - prove it! You are the problem as you want something that you cannot afford. Cut your coat according to your cloth.
Also, lenders ARE a problem - try getting a mortgage at a reasonable interest rate (4%?) with a 10% deposit on a properly assessed LTV.
It's clear that asking prices are the problem, not lending. I have a big deposit saved, add it to3-4 salary mortgage and are still very short.
Yet people blame the lenders, it's crazy. Greedy asking prices I say.
I think RR makes a valid point. It's actually pretty straightforward to get a mortgage at a sensible LTV and salary multiple.
RR please decide which post you want a conversation on or would you like me to copy and paste on every article today as well?
Some say these figures reflect the general stagnation of the market, which has been due to severe rationing of mortgage funds by lenders, and fears of higher unemployment among would-be buyers.
I say NO, the general stagnation of the market is NOT due to severe rationing of mortgage funds. It's due to asking prices being unacceptably high, mostly it's the prices being suggested by agents desperately trying to win increasingly scarce instructions from sellers!
Mortgage availability is fine. You can borrow up to 3.5 times a principal wage earner's salary and up to 75% of the purchase price, over 25 years (provided you have a reasonable deposit saved up). There is therefore absolutely nothing wrong with mortgage availability, at a responsible level of borrowing.
What's the problem?
There isn't one, provided you make sure the house price is commensurate with everything else - including earnings and sensible mortgage borrowing on these.
If UNrestricted credit is allowed to developers and purchasers, once again, another calamity will materialise in the shape of over-priced houses and suddenly then - no demand. Do we really want such a negligent attitude to ruin our favourite 'market'? NO! NO! NO!
Where are the responsible ones?
Sue the estate agents, I say, for over-valuing houses at market appraisal time - seriously.
In their headlong rush to win marketing instructions, they forgot to advise their clients diligently about real values, attainable within the 'client's' timeframe for selling.
If prices were 'allowed' to moderate, first-time buyers could get started with buying a property WITHOUT needing special treatment on loans. The market could simply re-establish from there. Simply-done.
Adrian Coles, director general of the BSA, said: “The number of transactions and the level of mortgage lending are likely to remain low until economic growth recovers and consumer confidence returns.”
Yeah and the lenders cut the rap with a silen c and give better interest deals and multiples of income and and and...........