New mortgage approvals slump by 20%

Mortgage approvals for home movers slumped by 20% during May.

The British Bankers’ Association (BBA) has reported that total loans approved during the month stood at 27,968 or 56% less than a year earlier.

The decline puts lending for house purchases at its lowest level since the association’s records began in 1997.

The total value of loans approved during the month amounted to £4.3 billion, 57% down on May 2007.

May also saw a decline in the value of mortgage advances, which reflected low levels of approvals in April and totalled £16.23 billion.

Net lending (total lending minus repayments and redemptions) for May was 23% behind the April figure, at £4.29 billion.

The BBA is not expecting any improvement in net lending in June, describing the level of approvals for May as “low”.

However, remortgaging business should continue to underpin the market accounting for a record 53% of all approvals in May but still showing a 10% decline on one year ago.

Last month, approvals for equity withdrawal and buy-to-let fell 38% on May 2007 and 9% on April.

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