Mortgage levels start to fall
For many months industry professionals have been surprised at the continuing thriving mortgage industry, despite rising property prices and rising interest rates.
However, it seems that the fourth rise in interest rates in the space of a year along with sky high property prices is finally taking its toll, as mortgage levels have finally started to decline. According to recent reports mortgage loans are now at their lowest level for a year, falling to the same level as they were in April 2006.
The figures have been released by the Bank of England, and shows that in April 2006 107,000 mortgages were approved for the purchase of homes. Since then the figure has been on the rise, but the figures for April of this year had fallen back down to 107,000. The value of mortgages that were approved also fell last month for the second time in a row, standing at £15.8 billion which is £2.3 billion below the six month average. The number of approvals on loans for purchasing a home fell by five thousand last month compared to March.
Industry professionals are predicting that with the recent interest rate rises the value of properties is going to start coming down, and this could result in another swing in the number of mortgage applications and approvals, If house prices do start to come down more people could find themselves in a position to apply for a mortgage. However, if it takes another interest rate rise to make this happen, the same people may be wondering if they can afford the repayments on a mortgage.
Howard Archer from Global Insight stated: 'The Bank of England mortgage approvals data add to the growing evidence that housing market activity is now coming off the boil. This is as higher interest rates and elevated house prices increasingly squeeze new buyers out of the market and make it more difficult for existing house owners to trade up.'
7th June 2007
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