New mortgage lending falls 69% year-on-year

Latest figures from the Bank of England show that in June, new mortgage approvals fell to their lowest level since the Bank’s records began, in 1993.

During the month, home loans approved for house purchases fell to 36,000, representing a 69% decline on June 2007 and 12% down on May.

Approvals for remortgages also fell, down to 84,000, compared with 90,000 in May.

By way of further comparison, 253,000 mortgages were approved in total in January of this year, compared with 165,000 last month.

Total net mortgage lending, which takes into account repayments and redemptions, rose by £3.1 billion in June, showing its slowest rate of growth for eight years.

Mortgage approvals have now been in decline for 14 months because the credit crisis has prompted lenders to tightened their criteria for borrowers and withdraw products.

In addition potential home buyers have held fire because of concerns over a house price crash.

The last fortnight has seen a number of leading lenders reduce interest rates, as money market swap rates finally began to fall.

Some mortgage experts are predicting that the worst of the UK’s mortgage famine is over, however today’s report by the Crosby Review suggest that it will be another two years before the current funding difficulties fully recede.

Discuss this in the Finance Markets forums

Story link: New mortgage lending falls 69% year-on-year