ROOF Blog

The British Bankers’ Association has revealed that mortgage lending has slumped to an eight-year low, as the lack of finance available continues to affect the markets. However, the number of mortgage approved for house purchases increased as buyers slowly starting coming back in the market. Loans were up to 27,685 in April compared with 26,670 in March and 18,027 in November, the lowest level since the records began in 1997.

The number of new mortgages fell by 25.3 per cent in the 12 months to March in figures from the British Bankers’ Association. The figure is also down 6.8 per cent compared with February. A spokesperson from the BBA said that it was ‘unrealistic to expect the mortgage market to receive in a steady and consistent way in the current economic environment’.

Mortgage approvals have increased for the third month in a row, according to figures from the British Bankers’ Association. There were 28,179 mortgages approved for house purchases in February, up from 24,278 in January, however, the figure was still 31 per cent lower than a year earlier. The rise has been attributed to the banks’ increased market share after handouts from the government.

Meanwhile borrowers are flocking back to fixed rate deals, as they look to protect themselves from rate hikes in the future. Legal & General found that during the first quarter of 2009, 77 per cent of residential mortgage customers chose a fixed rate deal, compared to 65 per cent in the last quarter of 2008. Of buy-to-let borrowers 68 per cent choose fixed rate mortgages between January and the end of March, up from 43 per cent at the end of last year.

Mortgage lending has fallen sharply, with approvals for house purchases 60 per cent lower than a year ago. The number of approvals fell by 14 per cent in November to a new low of 17,773, according to figures from the British Bankers’ Association. The number of people re-mortgaging but staying in their existing home also dropped significantly in November – by nearly half to the lowest level for eight years – as homeowners had problems finding deals. And the average amount borrowed was down 24 per cent on a year ago. With house prices falling and people waiting to see whether mortgages would get significantly cheaper, activity in the mortgage market remained stagnant.