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Mortgage approvals hit a new low

Mortgage approvals hit a new low

Category: Mortgages

Updated: 01/06/2011
First Published: 01/06/2011

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The number of mortgages approved plummeted to a near two decade low for the month of April, figures from the Bank of England have revealed.

There were just 45,166 new approvals for loans for house purchases in the month, the lowest figure recorded since the Bank began compiling such figures in 1992.

The number of approvals made in April was down month-on-month, on the previous six month average and annually, confirming a slump.

By value, the new loans were worth £6.2 billion, the same figure that was recorded in January.

The mortgage market has struggled to build any momentum in recent months, and with such a constraint on new lending that trend looks set to continue throughout 2011.

The Council of Mortgage Lenders (CML) has already said that new lending for house purchases this year will amount to the same level seen in 2010, at around £135 billion.

Robert Sinclair, director of the Association of Independent Financial Advisers, says that the mortgage market will recover to higher levels of lending, but that it will take some years to do so.

"Levels of £135 billion a year are too low, and people that have been in and around the market for a longer period of time broadly agree a market with gross lending of between £180 billion and £220 billion would represent a more normal market," he told Moneyfacts.co.uk.

"The mortgage market will get back to those levels but it is not expected to be before 2015".

Sue Anderson of the CML agrees: "Growth from current levels is both a realistic and desirable prospect, to restore market conditions in which consumers can transact freely without unnecessary barriers."

Figures from the bank also show that loans given to people for remortgages fell in the month, with just shy of 28,100 approved, worth £3.6 billion.

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