There has been no improvement in the number of mortgages being approved in the UK, despite the government's attempts to encourage financial institutions to increase lending. Data from the Bank of England revealed that in January, British mortgage approvals for house purchases fell and mortgage lending was lacklustre. Approvals stood at 54,719 in the first month of the year - a drop of 913 from December, when 55,632 approvals were recorded.
Not only is January's performance shy of the figure recorded in the month prior, it is considerably less the level forecast. Analysts had expected lending to increase in 2013, with 56,500 approvals predicted for January. This sum was the result of a rise in the flow of credit in recent months and it was hoped that the government's Funding for Lending Scheme would enable home buyers to secure the finance they need.
However, the reality has been disappointing and while consumer credit rose by a net GBP 0.4 billion in January and mortgage lending grew by GBP 147 million, the month posted the smallest increase since August. Lending is also just over half the level witnessed prior to the 2008 financial crisis.
Nonetheless, perhaps people should take heart. After all, lending has been above the monthly average of approximately 51,000 experienced last year. The Funding for Lending Scheme is also still ongoing and there are undoubtedly opportunities available for home buyers. Moneyfacts claims that finding a cheap fixed rate mortgage is now easier than ever. In fact, they are now at the cheapest level since they were introduced in 1989. With around 80 per cent of investors choosing this sort of mortgage, this is undoubtedly a sign that there is light at the end of the tunnel.
Sylvia Waycot, editor of Moneyfacts, told the Daily Mail: "Fixed rate mortgage rates are dropping like stones. More and more homeowners are benefiting from cheap fixed-rate mortgages as a result of the government's scheme. Rates started a slow descent shortly after the Funding for Lending scheme began last August, and have picked up speed. New ‘best ever’ deals are coming onto the market almost daily."
- Thursday 07 March 2013