New information has come through from the Bank of England regarding the number of mortgages that were approved in July, and it has produced the dip that was widely expected by experts.
The number of approvals achieved in June was 67,085, but this fell by just over 500 to achieve a figure of 66,569 in July. Many experts had predicted the total would fall to around 66,000 so the actual figure is slightly higher than was widely expected.
The pattern applies across the board
The figures for mortgage approvals have been seen to follow the dip through all areas of the mortgage market. These include mortgages for house purchases as well as those people who are re-mortgaging.
However the July figures are still encouraging compared with May, when the figures dropped as low as 61,914. Clearly there is a pattern here and we may suspect that approvals are perhaps settling as banks get to grips with the new stricter rules that have come in the form of the Mortgage Market Review rules.
Longer interviews for prospective mortgage applicants
Many banks and building societies are putting prospective mortgage applicants through a much longer interview in order to determine whether they can afford the mortgage they are applying for or not. The new rules mean individuals must be able to prove they can afford to pay for their mortgage in years to come if the interest rates were to go up. The delay in going through the process has definitely had a knock-on effect with regard to the number of mortgage approvals we are seeing.
Back in January this year the approvals were well over 75,000 in number each month. By May they had dipped down to below 62,000 approvals. While they increased in June we have now seen another dip in July, although it has yet to be determined which direction August’s figures will go in. Perhaps we are seeing a leveling out in the numbers that will continue throughout the months to come.
How are house prices affecting the number of mortgages being applied for?
This is a question that is of equal value when considering the direction mortgage acceptances are going in. House prices have been seen to carry on rising in many parts of the country. Finances are being squeezed from all directions and this has led to many people questioning how affordable property is at the moment.
This could equally have an effect on the drop in the number of mortgages being granted. It may not purely be a case of fewer acceptances: it could also be that fewer people are applying for mortgages in the first place. Some are happy to wait things out and see whether house prices will come down in the near future.
Only time will tell which way things will go in the coming months. One thing is certain though – anyone wanting to move has their work cut out for them at the present time.