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Approved Mortgage Deals Fall To An All Time Low |
Written by Phil Benson
Friday, 04 July 2008
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The number of new approved mortgages fell by 20 per cent in May 2008, to the lowest figure for more than 10 years. The drop between April and May was the biggest recorded, with just 28,000 agreed home loans being the lowest amount ever. Despite the Bank of England ploughing £50 billion into the property industry to help free up the mortgage market, banks have continued to restrict their lending approach and remove some products on offer which has made it more difficult for potential buyers to secure a mortgage. Financial information firm Moneyfacts, revealed that the average cost of a two year fixed rate mortgage broke the 7 per cent barrier recently, to reach its highest level for more than a decade. This occurred as the Woolwich, the lending arm of Barclays, raised the cost of some of its residential mortgage rates by between 0.3 per cent and 0.4 per cent. Similar rate increases were also witnessed from a number of lenders including Nationwide and Halifax. But these figures are bad news for the Government who are desperate to breathe life into the housing market and try to restore the economic picture of the last 10 years. The Chancellor of the Exchequer, Alistair Darling voiced concerns about lenders charging some consumers over the odds with arrangement fees soaring 66 per cent in the last 18 months, while the average fee for a fixed rate loan currently standing at around £850. "I'm very concerned that people ought to be treated fairly, especially people coming off fixed rates and going on to different rates. We have met the Council of Mortgage Lenders to try and reach an agreement to ensure that people are treated fairly, but if that isn't happening, I will ask the FSA to pursue the matter," Mr Darling said. Economist at Global Insight, Howard Archer, said the latest figures showed that the housing market had been ‘throttled by stretched affordability and tight lending conditions'. He now expected to see house prices fall by 12 per cent over 2008 and 2009, and a potential interest rate rise by the Bank of England brought on by concerns over inflation, could spark a bigger drop. Archer said, "Very low housing market activity seems certain to feed through to further depress already weakening house prices. Those people who took out 100 per cent or even 100 per cent plus mortgages within the last two years are particularly vulnerable to falling into the negative equity trap." Chief economist at the Royal Institute of Chartered Surveyors, Simon Rubinsohn, believes the data suggests the actual level of business will decline further, he said, "The sheer scale of the collapse in turnover will inevitably have real implications for the economy and make it hard for the Bank of England to accede to the wishes of the money markets and raise the base rate to combat inflation fears." The figures however, were used to attack the Government by shadow chancellor George Osborne. He said, "These figures show that home ownership is being pushed beyond the reach of millions under Gordon Brown. This is yet another blow to people wanting to get a foot on the housing ladder." Article Source: http://www.ArticleBlast.com |
About The Author:
Phil is an author of several articles pertaining to Mortgages. He is known for his expertise on the subject and on other Business and Finance related articles.
Phil is an author of several articles pertaining to Mortgages. He is known for his expertise on the subject and on other Business and Finance related articles.
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