The mortgage market remained weak in May in comparison to pre-Covid, according to the latest Bank of England data
Bank of England data shows a worrying 90% drop in mortgage approvals, with the number of deals being rubber stamped falling even further than at the height of the financial crisis.
The mortgage market remained weak in May in comparison to pre-Covid, according to the latest Bank of England data, a statement said. Mortgage approvals fell sharply on year ago levels, pointing to continued mortgage market weakness.
The Bank of England said the number of mortgage approvals for house purchase fell to a new series low in May, of 9,300. This is almost 90% below the February level and around a third of their trough during the financial crisis in 2008.
Paul Stockwell of Gatehouse Bank said: The number of mortgage approvals in May is roughly a third of what they were during the worst of the financial crisis, which really puts the pandemic’s impact on the economy into perspective.
The property portals are reporting strong demand since the market re-opened in mid-May. However, time will tell whether the pent up demand will come to fruition. June will be the first full month of property transactions since the UK went into lockdown and it will be these figures that will be hotly watched as a measure of how determined buyers and vendors who returned to the market have been, he said.
Hina Bhudia, Partner, at mortgage broker Knight Frank Finance, added, the Bank of England data reveals the unprecedented impact of the property market shut down when many surveyors were unable to visit properties to conduct valuations in-person.
Leading indicators suggest lending has been picking up since May, but it’s clear there is still a long way to go before many borrowers experience anything resembling pre-pandemic conditions, Bhudia said.
Bhudia said, a two-tier mortgage market has emerged in recent weeks as lenders have become more averse to risk, and have largely withdrawn from higher loan-to-value lending ahead of the wind up of government support schemes this autumn. This means the market remains particularly challenging for first-time-buyers, the self employed, or anybody that relies heavily on commission or bonuses to top up their income.
The picture is completely different for borrowers with larger deposits of 15% or more. They have much wider access to finance at historically low interest rates, and have underpinned a surge in activity as the property market bounced back to life.
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