Mortgage approvals rise for third month, we’re saved!
According to the British Bankers Association, the number of mortgages approved by major banks rose in February for the third consecutive month. Happy days are here again! Not quite, despite the rise, mortgages approvals are still close to historic lows and down over 30% on the same period for last year, so we’re not out of the woods yet.
Low interest rates and falling property prices may have tempted some cash-rich bargain hunters back into the market to buy houses at what they believe to be once-in-a-lifetime knock-down prices, but the bulk of the market is still frozen solid. Most importantly of all, first time buyer mortgages are still extremely hard to get hold of, and as everybody knows, the property market depends upon a steady supply of people buying their first homes in order for everybody else to be able to climb the ladder to bigger properties.
Even though the number of people taking out mortgages is edging upwards, the actual cash amount being let in mortgages is still plummeting. Just last week the Council of Mortgage Lenders said that mortgage lending in February was just under £10 billion, that’s 15% lower than in January and 60% lower than February last year. The CML claims that its members are finding it tough to lend to homebuyers because savers are putting their funds in safer places, such as National Savings and Investments.
Since the high street banks and building societies aren’t able to offer a reasonable rate of return, savers have nothing to lose by moving their money – which just goes to show that low interest rates are not necessarily going to help push property prices back up again.