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Mortgage approvals slumped 12% in February

The Bank of England’s latest mortgage approval figures show mortgage lending fell hard in February with a 12% drop.

Total loans secured on a property fell from 108,767 loans in January worth £13.1bn to 95,976 in February worth 11.7bn.

Within this overall figure loans for house purchase fell the hardest, from 57,899 in January worth £8.7bn to 48,986 in February worth £7.1bn.

On the plus side the Bank of England’s data also shows the average mortgage rate year-on-year for February has fallen from 3.63% to 3.50%, with the average floating rate sub-3%.

But Capital Economics says that while the fall can partly be explained by the end of the Stamp Duty holiday, banks tightening up their credit scoring criteria has also played its part.

Paul Diggle, property economist at Capital Economics, says: “Demand for mortgages rose at the fastest rate for two years in Q1, and lenders reported that the overall supply was unchanged.

“However a majority reported that credit scoring criteria were tightened and that the share of applications being turned down had increased.

“Moreover, most lenders expect the upward pressure on mortgage interest rates to be maintained and anticipate reducing the availability of mortgages in the next three months.”



A missed chance to aid stability

Despite recent optimism about the eurozone and government enticements for new-build buyers, it is still difficult to be hopeful about the prospects for mortgage growth in the next few years

Look to niche areas for ongoing growth

The avalanche of lenders changing their interest-only policies over the past few weeks is likely to cause a ripple effect among small lenders that will find themselves swamped with applications.

Business borrowers need fair treatment

My last thoughts on the Mortgage Market Review before we submit our response to the Financial Services Authority concern a niche group that is subject to potentially significant changes – small business borrowers.

Cricket - thumbnail

England vs Australia: pensions

Well, the cricket season is here, and England and Australia are stepping up to the wicket. Although we compete with each other in the sporting world, when it comes to pensions, Australia’s pension programme is held up as a model for our auto-enrolment initiative. Auto-enrolment was introduced because people weren’t saving enough into their pensions, and it is still early days but signs are positive. However, in Australia, saving into a pension is compulsory, and in fact employers are the ones who have to pay in. Employees in Australia can make additional contributions into their pensions, but they don’t have to. Should the onus be on the employer or employee to save? Well in the UK we think it’s both, but to get ‘adequate’ savings for retirement it’s the employee who has to pay more in.


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  • Ben Dover 10th April 2012 at 12:12 pm

    I think they should take in to account the mortgages for wendy houses places like Toys R Us sell. As there are many that are sold and I believe they really should add these. I believe a total of 14,000 were sold I am not sure if these had mortgages but I am sure some have.

  • Mary Lockyer 29th March 2012 at 5:14 pm

    “On the plus side average mortgage rate year on year down” well we all know that has changed, with some the of the most swinging rises in base rate by several major lenders, and swaps having gone up, do they think we are not aware of what is going on? there are precious few sub 4% long term fixes, this smacks of “spin”