Categorized | International

Housing Loans in UK Freefall Due to Limited Financing

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First time homebuyers and investors are struggling to secure financing in the United Kingdom. The difficulties faced by both groups are likely due to the tightening of lending standards, and rising mortgage rates.

 

The number of approved mortgages dropped significantly during the month of March. Just over forty-three thousand mortgages were approved, which is the lowest number in one and a half years. Many banks have reduced their lending to those putting down smaller deposits.

 

Approvals were not only down year over year, but they were also down month over month. They fell eleven percent from February to March. The decline was the second in as many months, leading many economists to grow concerned about the state of the residential real estate market in the United Kingdom.

 

The group that experienced the greatest decline in mortgage approvals was that of first time buyers. The decline among first time buyers can largely be attributed to the banks requiring a greater deposit than they had in the past. Those putting down a deposit of just fifteen percent were less likely than ever before to be approved for a mortgage loan. In fact, only ten percent of the loans approved were for first time homebuyers that put down fifteen percent or less.

 

Wealthy borrowers had a far less difficult time securing mortgage loans, likely due to the fact that they were able to put down larger deposits. It is clear that the banks are now less inclined to lend to those putting down smaller deposits, as such borrowers are considered to be riskier than those putting down larger deposits.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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