When interest rates were cut by 1.5% at the beginning of November you might not have expected mortgage approval rates to continue falling, but they fell by 61% on the same time last year to a record low since records began. According to figures released by the British Bankers’ Association (BBA), only 17,773 mortgages were approved for buyers in November, which was lower than the 20,767 that were approved in October and considerably lower than the 44,315 that were approved in November 2007.
The drop in mortgage approvals is likely to have a further negative effect on house prices going into 2009, with the combined value of mortgages approved in 2008 being down nearly 70% on the value in 2007.
The average mortgage for a home purchased in November was just £116,700, which was £12,000 less than the average in October. The average mortgage deal in June last year, when the property market was virtually at its highest, was £159,600.
November also saw a drop in approved remortgages, seeing just 29,798 new loans being taken out by homeowners, which is the lowest number or remortgages in eight years.
David Dooks of the BBA stated that customers were concerned about taking on loans with the housing market being so uncertain:
Volumes of mortgage approvals reached new lows and, with house prices still falling, the encouragement of lower costs had not filtered through by the month-end, largely because people remain concerned about the impacts of the rapidly slowing economy on their personal finances.