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UK Mortgage Approvals Falling


UK mortgage approvals fell in March for a second consecutive month according to the Bank of England.

The figures show that mortgage approvals have fallen by as much as 11.9% over the past two months and are now the lowest since October 2013.

This is despite figures from Nationwide Building Society which suggest house price inflation is at its highest for seven years.

Not in a housing bubble

The figures suggest that those who argue the UK is not creating a ‘housing bubble’ are correct. This is because mortgage approvals are at half the level which they were during the last housing boom.

During the last housing boom, mortgage approvals peaked at 133,000 a month in November 2003. However, mortgage approvals in March were recorded at 67,135, down from 69,592 in February and have now begun to drop off.

Mortgage Market Review

It has been claimed that the fall in mortgage approvals is a result of the Mortgage Market Review (MMR), which came into effect April 26th 2014.

The MMR has been designed to raise lending standards by ensuring that a mortgage applicant’s finances must pass a strict ‘stress test’ in order for a bank to approve a loan.

Howard Archer, Chief UK Economist at IHS Global Insight said: "It is likely that the further easing back in mortgage activity in March from January's peak level reflected some banks raising their mortgage lending standards before the new regulations."

Others have also claimed that a lack of homes for sale is another reason for the drop in mortgage approvals.

The Royal Institute of Chartered Surveyors (RICS) stated that people may be reluctant to move home, meaning there are a lack of homes being put up for sale.

Need advice

Are you planning to apply for a mortgage but are worried about the new rules or your ability to afford one? Contact one of our financial advisers by asking a question online or calling 0800 092 1245.

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