UK Mortgage Approvals Fall

Last month, UK mortgage approvals fell as property values remain uncertain and less attractive loan deals and their reduced supply, has meant that the demand to property has reduced.

A report by the British Bankers’ Association (BBA) has showed that potential buyers have been put off by the uncertainty of the market, and in a time of reduced consumer confidence and increased inflation do not want to be burdened by even higher mortgage repayments.

So far, banks have sanctioned 38,704 loans for house purchase, which is 39 percent less than last year, despite the figure being 9 percent higher than March.

This slight rise is not necessarily a cause for optimism as the BBA said that most of it can be accounted by the fact that many homeowners are switching mortgage provider to find better deals, as approvals for remortgaging rose 20 percent year-on-year to just over 74,700, which means this sector still remains strong.

Similar to the UK market, analysts predict that the market has not yet hit rock bottom as Global Insight predicts prices will drop 7 percent in 2008 and another 9 percent in 2009.

With such a low level of confidence, it is clear why first time buyers not only have difficulty in securing a mortgage but also face turbulent times with the threat of negative equity still looming large.

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