Written by rosalind renshaw

Mortgage approvals by banks for house purchase dived by 6% in a month in April and by 18% compared with the same month in 2010.

The figure of 29,355 was down from 31,205 in March and was a steep fall on the 35,840 mortgages approved in April 2010, according to the British Bankers’ Association. The falls are the worst since its records began.

Meanwhile, separate figures from HMRC showed that total house sales – including those bought without mortgages – were 7.6% lower in April than for the same month last year.

According to HMRC, there were 73,000 sales in April, compared with 79,000 in April last year – and compared with over 139,000 in April 2007.

The gulf between the BBA and HMRC figures go some way to showing just how many house purchases are now cash transactions. The BBA figures do not include mortgages lent by non-banks.

According to the BBA, remortgage approvals in April were also down, by 12% on the previous month and 7% lower than in April 2010, while approvals for equity withdrawal were ‘subdued’ at 22% lower than in April last year.

BBA statistics director David Dooks said: “Banks are still able to meet the need for home loans, even though demand remains weak.”

Howard Archer, chief economist at IHS Global Insight, said mortgage approvals are now running at just above half the average monthly level of 57,644 seen since 1997.

He said: “The relapse in mortgage approvals in April from an already low level reinforces our belief that modest falls in house prices are more probable than not over the coming months.”

David Brown, commercial director of LSL Property Services, was also downbeat. He said: “Mortgage approvals have fallen in number and in size over the last year and this is fundamental to the UK’s property market. Property transactions last month were at their lowest April level since 1995 and this was driven by the difficulty of obtaining mortgage finance for house purchases. Slow mortgage lending is at the heart of the current trends in the property market.”

Nicholas Leeming, business development director of property portal, said that the housing market is caught in a vicious circle.

He said: “Weak mortgage lending is causing the numbers of buyers to fall and falling demand from buyers is putting downward pressure on house prices. Downward pressure on prices is making owners reluctant to put their property on the market and lack of property on the market is deterring buyers. It’s a vicious circle, but it can be broken if the lenders want to tackle the problem and the key is to feed from the bottom up.

“First-time buyers need to be encouraged to take advantage of low prices by offering them finance that is appropriate to their situation. When there is more energy at the bottom of the market, the rest of the ladder can feed off it. But until the first-time buyer problem is addressed the property market will continue to bump along going nowhere fast.”

Simon Rubinsohn, RICS chief economist, agreed. He said: “The BBA highlights a lack of demand for mortgages as a key factor influencing the level of approvals at the present time. We would not disagree that it is one factor but the cost and availability of finance for first-time buyers remains the bigger problem in our view.

“Critically, the low level of transactions in the sales market is resulting in more activity in the private lettings markets where rents are continuing to increase as demand outstrips supply. In addition, it is having a bearing on high street sales with fewer property purchases resulting in less related spending on durable goods.”

David Whittaker, managing director of Mortgages For Business, said: “Overall consensus among the general mortgage borrowing population is ‘let’s wait and see’ so lending will continue to bump up and down for the foreseeable future.”


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    John Smith - bitter pill? ;o)

    • 01 June 2011 09:48 AM
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    WOW, even the lowest amount of mortgage aprovals on record dose not seem to worry estate agents, although we only had 1 extra day off for the wedding this year ! april had more shopping days for buyers to look no ? it will be interesting how the land registry report april at 11am today!

    • 31 May 2011 00:06 AM
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    Re "First-time buyers need to be encouraged to take advantage of low prices"

    Yeah what low prices? Maybe in a few years but they are still way too expensive.

    Mortgage approvals will continue to be low while asking prices are so ludicrous.

    • 29 May 2011 12:34 PM
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    Re Simon Rubinsohn, RICS chief economist “First-time buyers need to be encouraged to take advantage of low prices by offering them finance that is appropriate to their situation."

    Sorry what low prices lol?

    House prices are still unaffordable. Thats why transactions are falling.

    As a first time buyer I don't want more relaxed lending, I want decent prices.

    We want lower prices, we are priced out.

    • 28 May 2011 20:20 PM
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    Dear Mr Midbarcnathsbc

    How do you spell that last word? I think you got the first letter wrong!

    Dear Local Agent

    I think you have hit the nail right on the head. It would be interesting to have broker feedback on how many enquiries they get and how many they advise they will not get anywhere near the money they require and drop the enquiry there and then. If this were put into the equasion it might paint a very different picture.

    Dear Statto and PeeBee

    What will June bring then as I found that with limited days in April and May the work load was increased on those days so I do not know how the next month will pan out.

    Keep doing the stats you guys and report back in a month please. This will save me doing them. Lets face it statistics prove, and statistics can prove anything, that the market is .................................?

    • 28 May 2011 11:20 AM
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    It may have been said before but get lending you Bankers

    • 28 May 2011 07:46 AM
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    too little too late, seems that we've all missed out on the 'marvelous spring bounce' in 2011...blame it on the Royals...less working days....good weather..bad weather..labour..tories...anything

    • 27 May 2011 22:29 PM
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    Thanks Peebee. Oops! must write things down more clearly!

    You are right there were c.22% less working days in April than March meaning that (unless they have already adjusted for this) the approvals run-rate is c.20% up rather than 12% down. I guess we will find out when May figures come out.

    • 27 May 2011 17:42 PM
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    Statto: "Am I the only one to have noticed that there were 12% fewer working days in April than March..."

    Erm - I think you mean 22%...or, to be precise, 21.8%. March had 23 'working' days, against only 18 in April.

    • 27 May 2011 17:11 PM
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    Am I the only one to have noticed that there were 12% fewer working days in April than March and 10% fewer in April 2011 than April 2010

    If you factor this in then it would turn the reported drops into a 14% increase in approvals from March to April this year and only an 8% drop compared with the same month last year. Lies, damn lies, etc...

    Even if they are already adjusted for the different number of working days (I don't know), the impact of the Royal Wedding on working time lost across the economy in April (including in mortgage processing departments) will have impacted these figures. April was a funny month in the housing market.

    My source says that mortgage processing teams were struggling to turn applications around in April due to many staff having taken an extended break to make the most of the back to back bank holiday weekends.

    Not quite so newsworthy though! Is it?

    • 27 May 2011 16:52 PM
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    “The relapse in mortgage approvals in April from an already low level reinforces our belief that modest falls in house prices are more probable than not over the coming months"....modest...10%-15%...

    • 27 May 2011 13:24 PM
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    Some people just go out of their way to look for a scrap, don't they?

    "Seek and ye shall find" - as the Good Book says.

    Just don't complain about it afterwards. YOU started it...

    • 27 May 2011 13:14 PM
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    See prices are going to crash, just seen a magpie and that’s means bad, just stood on a cat, lost me crucifix, a number 7 red buss went by, its raining so house price will crash, we are doomed and I am like most HPC posters and complete dipstick!

    Oh but I is so cleva.

    • 27 May 2011 13:01 PM
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    From what we can tell many people are still oblivious to just how hard it is to obtain funding. We still have on a daily basis people registering and when asked if they have enquired about a mortgage they reply "No...but it wont be a problem"....Oh yes it will!!!
    According to a recent poll (heard this one on the radio) of the people interviwed 1/3 had given up any hope of ever owning a property....thats a shame.

    • 27 May 2011 09:41 AM
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    Mortgage approvals maybe down but how does it relate to mortgage applications? is the application to approval ratio up or down?

    also, with rents going up this means first time buyers are less able to save money meaning it is going to take longer for them to have the money for a deposit to buy a house. worrying, no?

    • 27 May 2011 09:22 AM