BoE: Mortgage approvals below average in October

Figures from Bank of England Money & Credit Statistics for October, released today, have shown that the number of loan approvals for house purchase was 59,426 in October, compared to the average of 63,727 over the previous six months.

Related topics:  Mortgages
Rozi Jones
1st December 2014
bank of england boe

The number of house purchase approvals fell by 3% month-on-month in October from 61,267 to 59,426.

The number of approvals for remortgaging was 31,238, compared to the average of 31,400 over the previous six months, while the number of approvals for other purposes was 9,043, compared to the average of 10,043 over the previous six months.

Paul Hunt, Phoebus Software managing director, said:  

“The figures reported by the Bank of England this morning indicate that uncertainty regarding interest rate rises, coupled with general nervousness surrounding the upcoming general election,  is affecting people’s appetite for both purchasing and remortgaging.  It appears that many have decided to sit tight, knowing they can afford their current mortgage, to see what happens over the next six months.  However, I suspect that lender targets may have a more positive effect on figures as more tempting deals come to market over the last two months of the year."

Richard Sexton, director of e.surv chartered surveyors, commented:

“Slow wage growth and low interest rates have made it difficult for borrowers to save for larger deposits. Help-to-Buy had been counteracting this by making it easier to acquire higher-LTV loans. However, the introduction of further regulation in the form of Loan-to-Income caps in early October has taken some of the wind out of first-time-buyers’ sails.
 
“The increasingly rigorous testing may have seemed daunting to prospective homeowners – a negative image has likely had a dampening effect on the real positive influence of MMR and Help-to-Buy. In addition, those who have seen regulation for the vital tool it is have started to buy up the existing stock of starter homes.
 
“It is not enough merely to tinker with the financial conditions of first-time buyers and those that lend to them with schemes like MMR or Help-to-Buy – especially if these necessary checks and balances are misconstrued by the very people they are meant to assist. In some areas of the country we’re approaching a situation where if more houses aren’t built, more houses can’t be sold."

David Newnes, director of Your Move and Reeds Rains estate agents, comments:  

“While the UK housing market has come on leaps and bounds since the recession, mortgage lending is a little more measured than earlier this year.

“Help to Buy paved the way for a new march of higher-LTV lending.  However, loan-to-income caps are now miring the ground, and there are signs of a retreat in new buyer demand.  Aspiring homeowners are also still battling against sluggish wage growth and rock-bottom interest rates to save up for deposits, and stricter affordability measures are discouraging first-time buyers.  Already we have seen first-time buyer completions fall back 12.3% over the last three months, and the Government and the Bank of England need to be mindful that further interventions do not to drain more confidence from the bottom of the housing market.”  

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