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Mortgages approvals fall in July, according to BBA

The British Bankers Association has revealed that the number of mortgage approvals fell in July from the previous month, as the availability of cheap lending for new homes was reduced.

In total, there were 42,800 mortgage approvals in July, while June figures stood at 43,200. Despite this though, volumes were still up by 12 per cent in July, when compared to the same month last year.

The Bank of England (BoE) introduced a cap on the number of high loan-to-value mortgages that are available at the end of June in order to start ‘cooling’ the housing market, meaning July was the first month that in which the effects of this could be seen.

New legislation introduced in the Mortgage Market Review (MMR) in April also enforced stricter lending practices, as an attempt to slow the market down and to curb borrowing. This was then followed by warnings that property price rises in the South East and London were becoming a “threat” to the economy, from governor of the BoE, Mark Carney.

The latest lending legislation, introduced at the end of June, has been brought in as an addition to the MMR, after fears that consumers could be looking to service larger mortgage repayments in the face of interest rate rises, which would have the knock-on effect of significantly reducing their monthly disposable income and their spending in other sectors of the UK economy. This, according to My Carney, could have serious implications on the rate of overall recovery in the economy.

In total, gross mortgage borrowing hit £10bn in July, which represented a rise of 16 per cent compared to the same month last year, which shows how prices have risen over the last 12 months. The prospect of a rise in interest rates also meant that remortgages climbed from 18,972 to 19,784 month-on-month in July, as people rush to fix their rate.

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