Mortgage approvals increased in September

| October 29, 2012 | 0 Comments
Mortgage approvals up in September

An increase in the number of mortgage approvals in September suggests that the ‘Funding for Lending’ scheme, launched by the Treasury and the Bank of England, may be starting to give the property market a boost.

According to Bank of England figures, the number of loans approved for house purchase increased by 2,103 to 50,024 last month, while the number of loans approved for remortgaging increased by 1,860 to 28,343.

Around 20 UK banking groups have joined the £80 billion Funding for Lending scheme, which makes low-cost funding available to lenders on the condition they pass it on to businesses and households by offering cheaper loans and mortgages.

Unsecured consumer credit increased by £1.2 billion in September, with credit card borrowing up by £307 million, suggesting that consumer confidence may be improving.

The figures represent the sharpest rise in consumer credit since the financial crash in 2008.

Less positive news on the mortgage market has been released by equity release company More 2 Life.

New research by the company reveals an increase in the number of people aged over 65 years who are still paying a mortgage.

The study found that 103,000 over-65 households are paying mortgages totalling £1.36 billion, including 22,000 people aged over 75 years.

More 2 Life suggests that the number of over-65s still paying a mortgage will increase as more interest-only mortgages come to the end of their term.

According to the Council of Mortgage Lenders, around 150,000 interest-only loans will mature each year until 2020 and it is believed that many borrowers will have inadequate savings plans in place to pay off the capital they owe.

More 2 Life attributes the high number of mortgagors aged over 65 to an increase in the number of people working past retirement age and an increase in the average age of first-time buyers.

Jon King, managing director of More 2 Life, said: “There is a potential mortgage time bomb ticking with pensioners paying home loans way past traditional retirement ages.

“Some can afford to pay off their mortgages but many will face income shocks and could really struggle if they still need to pay off a home loan as well as paying for the basics.”

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