Mortgage approvals dropped 50% in 12 months

13 August 2008

CML reports on its latest mortgage approval data

According to lenders, the number of mortgage approvals for home movers and first-time buyers dropped by 50% from June 2007 to June 2008.

This prompted lenders to warn that the current situation was likely to worsen in coming months because of lack of funding and the resulting tightened lending criteria.

Figures from the Council of Mortgage Lenders (CML) showed that the number of mortgages approved for first-time buyers dropped to 18,100 in June, an 8% drop on May and 46% less than the same month last year.

The data also showed that mortgage approvals for home movers decreased by 8% during June to 29,100, a reduction of 3,000 from the 32,100 approvals in May and 54% less than the 64,100 approved in June 2007.

June also saw a 22% drop in the number of remortgages approved, from 96,000 in June 2007 to 75,000.

Bob Pannell, CML’s head of research, said: “Mortgage lending activity remains relatively weak and will decline further in the coming months as a result of funding constraints and lower consumer demand.”

Additionally, the data showed that the average deposit being paid by borrowers was on the increase from 20% in May to 22% in June said the CML.

Also the cost of the average fixed-rate mortgage reached a three-month high in June rising from 5.82% in May to 5.86%.

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