Wednesday, 30 July 2008

Mortgage approvals hit a record low

The UK mortgage market has literally imploded. In June, banks approved just 38 thousand mortgages, compared to 144 thousand during the same month the previous year. That is a fall of almost 70 percent.

The banks are blaming a "lack of funding" but what does that mean? Why won't banks lend to each other? Why won't investors buy mortgage backed securities? Could it be that everyone now fully understands that the UK housing market is horrifically overvalued, that current home debtors have a high probability of default and that funding mortgages today is simply too risky?


Anonymous said...

I hope this low mortgage number is maintained for at least 12 months. That would mean a good proportion of recent buyers who thought they could do-up and resell a property (and make money) will be in for a loss in real terms.

It looks very true that improving a house does not add value now based on the amount of time it takes to sell. However removing the incentive for these people to be in the market is one more nail in the coffin for the ever increasing house price circle.


aSteve said...

While I'm hesitant to jump to conclusions, the slowdown in mortgage approvals appears to be linear, rather than geometric... with this in mind, I have to wonder, if there will be any mortgage lending at all by the end of the year?

I'd love to see if mortgage lending has ever been as infrequent as today prior to 2003.

CWS said...

Alice, missed you, glad you are back.

Anonymous said...

Thanks for this graph, Alice - my, look at the drop below even the sluggish property market of 93-96. How wonderful that first-time buyers may be able to purchase at sensible prices in a few years' time.

Never mind oil profits - let's have a retrospective tax on all those unearned but massive City bonuses for the fools who sold dodgy mortgages and derivatives, homologated for assistance to first-time buyers in 2011.

B. in C.