Mortgage approvals fall to nine-month low
Mortgage approval figures have fallen for the ninth month in a row, as inflation, rising house prices and wage stagnation continue to blight the housing industry.
Many within the housing industry are at odds with one another with regards to the new figures released by the UK trade body UK Finance.
The report has detailed that as of June, gross mortgage borrowing has continued to rise – 6% higher than the same time in 2016 – but the number of mortgage approvals have slipped for the ninth month in a row.
With low interest rates, mortgage providers are currently offering excellent deals on fixed-rate deals, and these packages have been designed to tempt potential homebuyers into pulling the trigger while the market seems buoyant.
However, the stark difference between the increase in total mortgage borrowing and decrease in mortgage approvals have given experts much cause for concern.
Representatives from various lenders have been quick to thank the ‘resilient’ housing market for the increase in money borrowed. They are, however, failing to realise the dangers of a reduction in the number of transactions and what this could mean for the industry in the future.
The economic squeeze
With the outcome of Brexit hanging over the heads of the British population, combined with the high rates of inflation reducing the value of the pound, it seems that for now at least, UK consumers are choosing to bide their time when it comes to large purchases such as homes and cars.
“The fundamentals for house buyers are likely to remain weak over the coming months with consumers’ purchasing power continuing to be squeezed by inflation running higher than earnings growth,” said Howard Archer, chief economic advisor for EY Item Club.
“It is also very possible that the labour market will increasingly falter despite its current resilience.”
Moreover, it’s not just the total mortgage borrowing rates that have increased, as credit card borrowing has also increased by 5.5% over the past year.
These divisive figures make it clear from a macro perspective that a large proportion of the British public are being forced to borrow money for purchases that just ten years ago could be afforded through everyday savings.
But what about those who wish to sell their house fast?
In the near future at least, current homeowners are finding themselves having to stay-put unless the move is unavoidable.
With falling levels of mortgage approvals and ever-increasing house prices in a world where wages are failing to match up, those who need to sell may have to prepare themselves for a long wait as the pool of available buyers continues to dry up.
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