by Mark Johnston
Mortgage Approvals on the up!
It seems that many borrowers have faced tough times in recent months trying to take out a mortgage as lenders have tightened their lending criteria even further, thus causing a drop in the proportion of mortgages approved.
However, according to the latest National Mortgage Index from the UK’s leading independent mortgage broker, Mortgage Advice Bureau (MAB) mortgage application activity has rocketed up by 22 per cent in the last month as lenders continue to cut rates and increase product availability.
Brian Murphy, head of lending at Mortgage Advice Bureau, stated that “There has been a surge in mortgage applications in the last month, especially for remortgages, and activity levels are at their highest since immediately prior to the financial crisis”.
There was tentative evidence that the scheme designed to ‘unclog’ the flow of credit to Britain’s home buyers has started to have an impact as official figures show a spike in mortgage approvals.
This increase in activity therefore suggests the Government’s Funding for Lending Scheme (FLS) is now filtering through, therefore enabling lenders to compete for business through lower rates and the launch of new products.
Mortgage approvals are it appears continuing to rise, with figures growing for a third successive month. Approvals in September rose 4 per cent month on month to 50,000.
The Council of Mortgage Lenders (CML) said recently that mortgage lending increased 13 per cent during the third quarter, with 146,500 loans advanced.
The bank of Englandhas also stated that the number of loans approved for residential property purchases have rose by approximately 2,103 in September.
Nida Ali, economic adviser to the Ernst and Young ITEM club, suggested that “Septembers increase in mortgage approvals is encouraging and suggests that the Bank of England’s funding for lending scheme may be beginning to have some impact”.
Figures also show that August was also particularly strong with 53,900 loans advanced .
Paul Smee, the Council of Mortgage Lenders (CML) director general, said: “While lending in September was slow after a particularly strong August, quarterly figures suggest that the underlying picture is more positive”.
Howard Archer, chief UK and European economist at IHS Global Insight, said “Some support for house prices should come from recent decent employment growth and likely extended low interest rates, while mortgages look like become increasingly available helped by the “Funding for Lending” scheme launched at the start of August by the Bank of England.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “On the mortgage front, there is good news with increased loan availability, better rates as a result of Funding for Lending and increased confidence as we emerge from the double-dip recession”.
Many industry experts feel that the rise of mortgage approvals continues at a modest pace but in the right direction.
Jonathan Samuels, chief executive of Dragonfly Property Finance, said: “Even if the economy continues to improve and confidence grows, the question then is whether the banks will lend in any material way to higher Loan to Value (LTV) borrowers?
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