There were only 51,610 mortgages approved in June, which is the lowest number of approvals since records began in 1997. Of these approvals, worth £6.5 billion – according to the British Banking Association (BBA), there were 26,269 approvals for house transactions. This represents a 41 month low.
The appetite for borrowing has slumped and the wet weather and jubilee bank holiday have also affected buyer's activity.
Lenders have also tightened their criteria for borrowing, making it more difficult for those looking for a mortgage to find a good deal. Remortgages were also down as it seems paying off loans and overdrafts and saving money is the new consumer ambition in this unsteady financial climate.
What can I do if I want to borrow?
- It is hoped that the problems in the market will be offset by the Bank of England's new funding for lending scheme. It is aiming to push £80 billion through to borrowers.
- It also seems saving a larger deposit can be key to keeping your repayments down. Those trying to borrow with lower deposits have had a particularly difficult time. So saving that bit extra may give you the leg up on the ladder that you need!
- Make sure you budget, so you have a clear account of how much you can spend and how much you are already paying out each month. It is important that you are completely comfortable with the amount you will be repaid.
- When you are buying a house do not be too worried by short term volatility. If you are buying a house to live in you are able to think longer term so rise and falls in the market should not put you off buying completely.
- Downsizing may be key! There is no point in tying all of your money up in your house. Looking at a smaller house or a less expensive area can be the difference between mortgage acceptance and being stuck at the bottom of the ladder still, there is always the opportunity to trade up at a later date.