Figures from the Bank of England show that 56,161 mortgages were approved for house purchase in March
According to figures from the Bank of England, 56,161 mortgages were approved for house purchase in March.
This was a drop-off of nearly a quarter (24 percent) compared with the previous month, and the lowest monthly total since 54,341 approvals were recorded in March 2013.
The pause button has been pushed on the housing market as people and businesses adhere to lockdown measures imposed on March 23 to limit the spread of coronavirus.
House hunters can still carry out “virtual viewings” of properties online, but many will not want to put in offers on homes until a time when they are able to physically view them.
Some lenders also temporarily restricted the mortgages they were offering in the early days of the lockdown.
Approvals for re-mortgaging fell by 20 percent to 42,600, the fewest recorded since August 2016, the Bank’s Money and Credit report said.
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: This is one of the first housing market surveys to show the impact of coronavirus on the market as it confirms a sharp fall in mortgage approvals, which we also noticed almost instantly.
The only good news is that it seems most deals have not been cancelled or withdrawn unless the buyer is employed in an industry particularly badly affected by the pandemic. Most seem to be prepared to proceed hopefully sooner rather than later when restrictions are eased and surveyors can start to revisit properties again, Leaf said.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: The slump in mortgage approvals in March partly reflects supply issues; surveyors could not assess properties after the lockdown began on March 23, and staff shortages at lenders prevented them from processing applications. But surveys show that house purchase demand has slumped too.
Right now, the hit from rising unemployment is not been countered by lower mortgage rates, suggesting that house prices will fall sharply when the housing market reopens in the summer, Tombs said.
Households also collectively repaid £3.8billion of consumer credit, which includes personal loans, overdrafts and credit cards, in March – the largest net repayment the Bank’s Money and Credit report has recorded.
Within this total, credit cards accounted for £2.4billion of net repayments.
This pushed the annual growth rate in consumer credit down to 3.7 percent in March, the lowest level since June 2013.
Within this, the annual growth rate of credit card lending dipped to minus 0.3 percent – the first negative annual growth since the Bank’s series started.
The report also said that UK businesses borrowed an extra £34.1billion of loans from banks in March – a record increase.
This took the annual growth rate of borrowing by UK businesses to 8.2 percent. Within this, the growth rate of borrowing by large businesses increased sharply, to 11.8 percent.
Tombs said the economic figures for April will “reflect the impact of the furlough scheme and rising unemployment on households’ incomes and cash holdings”.
He added: But with all households seemingly running a very tight ship at present, excess savings should accumulate this year, potentially laying the ground for a strong rebound in spending in 2021.
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