Increase in overall borrowing yet fewer mortgages approved

The Bank of England recently released figures showing that the number of UK mortgage approvals fell during May, although the amount borrowed overall saw a rise during the same period.

Approval numbers dipped to 61,707, which represents the lowest figure seen in the past 11 months. Before the credit crunch, the average figure for approvals was 100,000 per month, which indicates that the number of mortgages issued is still well below pre-crisis levels.

At the same time, overall mortgage lending is continuing to grow, indicating that house prices are still rising.

In an interview with Reuters, the chief economist for the Berenberg bank, Rob Wood, said he interpreted the latest figures as evidence that the UK housing market is becoming steadier. He expects house prices will rise by around 10 percent a year during 2014 and 2015, and said that action taken by the Bank of England to curb the housing market, while welcome, would probably not have an effect until the middle of 2015.

New rules introduced by the Bank this year have seen lenders reducing the number of mortgages issued, as regulators demand extra checks on home buyers to ensure their finances can withstand rises in interest rates. The fall in the number of mortgages being approved may be due to lenders adjusting to these new rules, or it could represent the beginning of a permanent reduction.

As it becomes more difficult to obtain mortgages the demand for qualified mortgage advisers is increasing. More people are completing CeMAP training courses, in order to provide the specialist help members of the public need if they are to find a suitable mortgage.



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