Home Loan Approvals Slump To Record Low

Wed, 25 Jun 2008

The number of home loan approvals have fell by 20 per cent during May to reach a record low, latest figures have revealed.

Just under 28,000 loans were approved for people looking to buy a new home, 56 per cent less compared to figures for the previous year, and the lowest level since the British Bankers' Association (BBA) began collecting the data in 1997.

During the four week-period loans for house purchases totalled just £4.3 billion, 57 per cent less than 12 months ago, while the value of mortgages advanced during May also fell, following weak approvals in April.

The BBA figures showed total lending dropped by £800m to £16.23 billion in May, while net lending increased by only £4.29 billion – down 23 per cent from April's figure and the second lowest rise since 2002.

In addition, mortgage approvals for people withdrawing equity or taking out buy-to-let loans fell 38 per cent year-on-year and 9 per cent during the month.

The BBA warned that the low level of approvals during May meant that subdued lending looked set to continue.

Lending figures for people looking to remortgage showed some promise as homeowners continued to look for new deals after coming to the end of short-term fixed rate loans .

Over 63,000 loans were approved for people switching loans in May, with remortgaging accounting for a record 53 per cent of all approvals, although figures were still 10 per cent lower compared to the previous year.
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