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Is The Mortgage Market Review Slowing The UK Property Market?

Is The Mortgage Market Review Slowing The UK Property Market?

Is The Mortgage Market Review Slowing The UK Property Market?

The number of new mortgages being approved by lenders dropped to an 11 month low in May 2014 as the new affordability rules brought in by the Mortgage Market Review (MMR) caused borrowers to be put off and delayed hundreds of existing mortgage applications.

The Mortgage Market Review brought in on the 26th April 2014 requires all UK based mortgage lenders to carry out rigorous affordability checks on the financial status of borrowers.

These stringent affordability checks include stress tests designed to determine if a borrower could continue to repay their loan if interest rates rise significantly.

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Mortgage Market Review Regulations Will Slow Property Transactions

Mortgage Market Review Regulations Will Slow Property Transactions

New Mortgage Rules Will Slow Down
UK Property Transactions

65,500 property purchases were approved by mortgage lenders in March 2014, showing the second successive monthly drop in the number of property transactions as mainstream mortgage lenders implement stricter rules which will be rolled out fully at the end of April 2014.

The figures for March were 7% lower than the 70,309 mortgage approvals recorded in February 2014.

The recent falls in the number of mortgage approvals are a stark contrast to the 11 months of continuous improvements which saw average monthly lending levels increase from 52,537 to 76,753 between February 2013 and January 2014.

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UK Residential Property Prices Are Still Increasing

UK Residential Property Prices Are Still Increasing

UK residential property prices increased by between 0.3% and 0.6% in June depending on which house price index is viewed

Figures released by Nationwide and Halifax have some disparity; however, both report that residential property prices are increasing. 

Nationwide report that UK residential property is valued 1.9% higher than a year ago with the typical UK home worth £168,941 (GBP). 

Halifax report that UK residential property is 3.7% higher than in the same three months of 2012.

The data from Nationwide shows that the southern regions of England, especially London, continued to record stronger rates of property price growth and London also tops the table of property price growth in the second quarter index.

Overall the price of a typical residential property is up 1.4% compared with the same quarter in 2012.

10 of the 13 UK regions saw annual property price rises in the second quarter of 2013, however, Northern Ireland is still the worst performing region with property prices down 2.1% in the second quarter of the year.

London property prices increased by 5.2% compared with the second quarter of last year and the city has seen the greatest recovery in property prices of any region with prices now 5% above their 2007 peak at £318,214 (GBP).

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2nd Consecutive monthly fall in residential property mortgage approvals

2nd Consecutive fall in residential property mortgage approvals

Mortgage approvals for UK residential property

purchases dropped in February

The Bank of England (BoE) has confirmed that residential mortgage lending fell for a second successive month in February 2013 reinforcing previously released data from the Council of Mortgage Lenders (CML) and the British Bankers Association (BBA).

The Bank of England figures show that 51,653 residential property mortgages were approved in February, the lowest number since September 2012.

The overall figure was down on the Bank’s revised figure of 54,187 mortgage approvals expected for January, and the amount of mortgage approvals for the purchase of residential properties were less than was originally predicted for February.

Economists had forecast a fall in mortgage approvals, down to 53,700, according to a panel of estimates by Bloomberg. However, the Bank of England have said that remortgage lending in February had increased by 3.8% to 26,771.

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Hype surrounds 2013 Mortgage Figures

Hype surrounds 2013 Mortgage Figures

2013 started with claims that the UK had recorded the best lending on mortgage figures in five years, but these claims by the UK Council of Mortgage Lenders (CML) are being disputed.

According to the CML, a total of 38,300 loans were advanced for residential property purchases in January, the highest for the month since 2008 when 47,800 loans were advanced. The January performance came despite a marked drop from December 2012 when 45,900 mortgage loans were advanced.

Now critics have suggested that the CML’s mortgage figures were pure hype and speculation as mortgage approvals, and not actual monetary advances, were actually down in January this year, and no figures were released for the UK Buy To Let mortgage market for the same time frame.

Mortgage figures for approvals on residential property purchases appeared to be up 11% compared with January 2012 when there were 34,600 mortgage loans approved for residential property purchases and activity by first-time buyers and home movers both increased.

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 Mortgage Approvals Fall As Demand From

Residential PropertyBuyers Fades

UK Mortgage Approvals Fall

UK Mortgage Approvals Fall

UK mortgage approvals in February 2013 have fallen to the lowest level seen for seven months according to E.surv chartered surveyors.

E.surv, reckon that only the government Funding for Lending (FLS) scheme is preventing a much steeper fall in residential property mortgage lending for purchasing, even though uptake from potential property buyers has been lower than expected.

Overall UK mortgage approvals fell by 11% in February to just 49,019,  down from 54,719 approvals recorded in January 2013, making it the lowest mortgage approval level since July 2012, according to E.surv data.

The fall in mortgage approvals comes despite a wider and cheaper range of residential mortgage products on offer, which suggests that the drop in mortgage lending was due to weakening borrower demand and not a decline in the availability of residential mortgages.

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The Bank of England reported on Wednesday that mortgage lending to home buyers in December was at its highest for nearly a year, although approvals remain low compared to the long term norm.

UK Mortgage Lending Increases

UK Mortgage Lending Increases

The number of residential property mortgage approvals in December was 55,785, with economists estimating that a level of 70,000 to 80,000 being consistent with stable prices.

Figures from the Bank of England (BoE), that were published last Friday, showed that the bank’s Funding for Lending Scheme, which went into operation in August 2012, may finally be starting to increase the amount of money being lent by banks and other mortgage lenders to residential property buyers.

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UK Mortgage Approvals Exceed Expectations In October

UK Mortgage Approvals Increase in October

UK Mortgage Approvals Increase in October

UK Mortgage lending reached an 11-month high in October, providing evidence that the housing market may finally be picking up, after a lull in recent months, according to the Council of Mortgage Lenders (CML).

 Gross mortgage lending rose to £12.9 Billion (GBP) and was 4% higher than in the same month in 2011, indicating that the government’s Funding for Lending scheme, designed to boost lending to households and businesses, is having some effect.

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UK Property Market Still Recovering From 2007 Financial Meltdown

UK Property Market Still Recovering From 2007 Financial Meltdown

Five Years After the financial collapse of the UK’s 5th largest mortgage lender – Northern Rock, the UK property market is still struggling to return to its halcyon heyday, many potential homebuyers are still trying to get on the property ladder.

However, educated property investors are cashing in using the best techniques taught by successful property investment experts who have been making money from property since the crash.

What happened?

In late 2007 and early 2008, many UK financial institutions suffered near collapse due to the onset of global financial meltdown. This economic crisis was the worst since the Great Depression of the1930’s.

Northern Rock Fiasco Still Haunting UK Property Market

Northern Rock Fiasco Still Haunting UK Property Market

Banks had to have government bailouts and investors faced economic downturns on stock markets the world over.

This led to the sub-prime mortgage crisis in the United States of America (USA), where US banks had to provide emergency bailouts to the 2 main mortgage lenders, Fannie Mae and Freddie Mac, due to restrictions on the availability of loans.

The repercussions of the US crisis were felt in the United Kingdom, particularly in the property market.

The U.K. credit crunch began because The Bank of England had to provide emergency funding to the 5th-largest mortgage lender in the UK, Newcastle-based – Northern Rock. The Northern Rock Crisis caused panic on many UK high streets.

Investors suffered vast losses due to the high proportion of mortgage loans made to homebuyers in the United States who had a poor credit history. Banking institutions and investors were left unable to offset debt from these sub-prime mortgages.

One UK lender affected by the toxicity of the situation was Northern Rock, who were bound to struggle because they were acting as a specialist mortgage lender.

Although Northern Rock was still profitable at the time, many customers withdrew the contents of their accounts out of fear of losing money. Northern Rock suffered losses totalling over £2 Billion (GBP) and had to be bailed out by the UK government.

Five years on…

The UK property market has changed dramatically since the 2007/8 global credit crunch that affected Northern Rock.

Now, it is much harder for property buyers to even get a mortgage, as lenders have reigned in lending because they are still scared of over exposure and almost all mortgage lenders have tightened their qualifying criteria and revised the loan to value of many of their mortgage products, with some lenders withdrawing what used to be their most popular interest only mortgage products.

Even selling property to potential buyers has become more of a challenge. As property asking prices continue to fall

Statistics Then & Now

Number of properties advertised for sale

2007 – 120,000
2012 – 93,000

A drop of 23%

Number of properties sold

2007 – 129,000 properties sold.
2012 – 74,000

a 44% drop.

UK property asking prices figures for both 2007 and 2012 are almost the same, with 2012 just about £1000 (GBP) less than in 2007.

Number of mortgage approvals

2007 – 105,000 approved.
2012 – 50,000 approvals.

With the collapse and government buy out of Northern Rock, the UK banking system has seen some readjustment but it is safe to say that the UK property market has changed drastically.

Northern Rock, a once solid financial institution was bailed out by the government and became publicly owned 3 years ago is now owned by Virgin Money, and is remarkably still trading, although the government state that lessons have been learned, many UK investors and even homebuyers are still struggling with doubt and it may be that the UK property market will never be the same again.

Now there is a brand new resource available for serious property investors, who want to get the most from property – A step by step zero-to-multi-millionaire Property Investor Roadmap – written by successful Multi-Millionaire Property Experts – Rob Moore & Mark Homer of Progressive Property.

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The Bank of England said that successful mortgage approvals have dropped below the six-month average, according to new data.

The previous six-month mortgage approval average was 53,000 leading up to April 2012 but the figures only amounted to 51,823 successful mortgage applications being recorded, despite lending approvals being up by 1.5% from March to April of this year.

The stamp duty exemption that ended on March 24th 2012 is thought to have boosted the UK residential property sales market with many First-Time Buyers (FTBs) keen to snap up residential property and reap the benefits before the deadline date.

Figures also showed that more people remortgaged their homes in April 2012 with over 30,000 successful applications going through, which is above the recent average.

However, the UK property sales market is now expected to slow again, as banks become more reluctant to approve residential property mortgages and many have increased the criteria required for a successful mortgage application.

This has been put down to the difficult position the banks find themselves in amidst the current Eurozone crisis, the unstable UK and global economy and further regulations for the banks when it comes to lending.

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