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Mortgage Slowdown Continues With Credit Crunch

Mortgage Slowdown Continues With Credit Crunch Bank of England figures for March have revealed that the mortgage market slowdown increased over that period.

The figures show that new mortgage approvals plunged to 64,000 in March - the lowest level since records began in January 1999, and a 44 per cent drop compared to the same time last year.


At the same time, several surveys have revealed that house prices are starting to tumble.

The Nationwide building society said that British property prices have fallen for the first time in 12 years.

In April, prices dropped for the sixth month in a row - by 1.1 per cent. The average property now costs £178,555 - some £1,759 lower than the same time last year.

Nationwide said that this reflected a weakening market damaged by "poor affordability and tighter financial market conditions”.


Despite the Bank of England’s recent £50 billion plan to allow lenders to exchange their mortgage debts for secure government bonds, mortgage offers for new borrowers have continued to dwindle.

Nationwide was the most recent lender to take this course of action. Now all but two of its deals require the borrower to cough up a 10 per cent deposit.

However, the Royal Bank of Scotland and its subsidiary NatWest is defying the trend.

It has cut its fixed and tracker rate mortgages by up to 0.3 per cent for new borrowers who buy directly from its branches and for customers switching deals. The biggest rate cuts will only be available to customers offering a bigger deposit though.

Despite the slowdown in the mortgage market, the Bank of England said that borrowing in March increased on credit cards, cheap loans, and overdrafts.

Credit card lending increased by £400 million and other forms of borrowing were seen to rise by £900 million.

Remortgage News posted on 02 May 2008

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