Mortgage approval rates are still falling

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Mortgage approval rates are still falling

Unfortunately more bad news has been released in the form of further falls in approval rates. Despite the government’s attempts to improve the mortgage market by lowering the base rate to 4.5%, approval mortgage rates have dropped further.
The Bank of England has released figures showing that only 32,000 mortgages were approved, 1,000 fewer than in September. This is a useful indicator as an indicator of the trends in lending. With prices already fallen by 10-15% in the last year and sales down by more than half, the signs don’t look good at the moment with difficult market conditions set to continue in the near future.
However while approval rates have fallen by 74% in the last year, approval rates have hovered between 32,000 and 33,000 over the past four months, suggesting mortgage lending for home mortgages have reached its bottom. It’s now just a case of when the market will start to improve.

The problem lies with the banks that aren’t yet confident with lending with each other and the rate at which they lend, known as London Interbank Offered Rate (LIBOR).

Sales figures released also show the value of mortgages loaned during October dropped by almost 70%, with a value of £459m that is a staggering 94% drop compared to just one year ago.

It is believed one of the reasons is lack of confidence in the market which is keeping homeowners with their existing home and the further falls in prices are putting first time buyers off from getting a mortgage and their first home. It may well be the first quarter of 2009 before we see any improvements as the market is so volatile the prediction is a cautious one.

It is worth still searching the mortgage market whether you are looking for a mortgage Falkirk or a mortgage in London as you may be able to improve on your existing offer, especially with the recent base rate cut. Not all lenders have passed on the rate cut so it may well be worth while using a mortgage broker to search the whole market for you to find the best deal available.

Article Source: http://articlenexus.com

Chris Borthwick writes articles on financial subjects. Articles are written for the finance industry, mortgage brokers, and for the general public.

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