Since the financial crash and housing market crisis in 2007 getting approved for a mortgage has been more difficult than ever before. For a lot of potential homeowners this is a massive stumbling block for them to get their foot on the property ladder and the new figures from the Bank of England do not make great reading.
In March 2014 alone the number of mortgage approvals fell by over 2000 when compared to the previous month and this represents an 11.9% fall since the beginning of the year. The number of mortgages approved in February 2014 stood at 67,135 and for many analysts this was expected to rise to over 70,000 in the following month. This was in line with the growing confidence in the housing market as a whole however numbers for March fell to 69,592. Not only has this taken industry leaders by surprise but it has also put a dent in confidence for new applicants.
Nationwide no commission estate agent, I Am The Agent, wrote about the new rules surrounding the criteria for being approved for a mortgage a few months ago and warned that they could negatively impact many potential homeowners. These new rules included things such as taking into account personal expenses such as holidays and even pets to assess an individual or couples’ suitability for a mortgage, and even tracking via social media!
The new criteria were first put forward by the Mortgage Market Review (MMR) earlier this year and many lenders formally adopted this practice at the end of April. However, the figures that have recently been released by the Bank of England were related to the month before the criteria was put into practice by lenders such as Kensington, Skipton and the Coventry Building Society.
One possible answer to this fall was suggested by the UK chief economist at IHS Global Insight, Howard Archer. He explained that even before the MMR suggestions were taken on board by many lenders, a lot of organizations that would normally approve mortgage applications have tightened their lending and upped their standards for approval. This was reaffirmed by the Centre for Economics and Business Research that attributed this decrease to more strenuous checks on potential homeowners.
Another heavyweight waded into the debate and the Royal Institution of Chartered Surveyors (RICS) suggested that the problem was more down to a lack of available properties on the market. The number of homes for sale has dropped in recent months with people reluctant to move, however the UK housing market actually looks to see continued growth. The Bank of England maintained that things are on course in regards to growth and, compared to this time 2 years ago, mortgage approvals are up by 20,000.
I Am The Agent is the UK’s leading online estate agency and has substantial experience with helping people get onto the property ladder and with a wide selection of nationwide properties to suit all budgets and tastes it really is a great way to start your online property search. Mortgages are still being approved however it is a good idea to get professional advice to stand the best chance of success.
*Sources
This is Money, BBC Business News.