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Fewer mortgage approvals as property prices stabilise

As UK property prices increased at a much steadier rate than experts predicted, it has been revealed that lenders approved the lowest number of mortgages in seven months.

According to the British Bankers’ Association, a poll conducted by Reuters predicted that 45,500 mortgages would be approved in December. The actual number of mortgage applications which were approved was 43,975. This is the lowest number of approvals since May 2015.

However, in comparison to the number of mortgages approved in December 2014, the figure was 24% higher. The chief economist for the BBA, Richard Woolhouse, stated that household borrowing last year was much stronger.

A report by Nationwide indicated that property price growth had slowed to 0.3% at the start of 2016, although economists had expected it to be around 0.6%. December’s price increases had been the highest in eight months, at 0.8%.

The chief economist at Nationwide, Robert Gardner, believes that 2016 will see house prices start to rise again, as a result of high demand. He also warned that supply would be restricted due to a delay in construction activity. According to Gardner, the increased demand and lack of supply will push property prices higher and have a negative impact on affordability. Nationwide has stated that the average price of a home is now £196,829.

First time buyers are likely to struggle, as although the rates for high loan to value products are falling, they still pay more interest than borrowers with a larger deposit. A CeMAP qualified mortgage adviser is able to offer advice to all borrowers looking for a home.

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