Mortgage providers such as Mortgage Express have approved fewer mortgages over the last month. The figures from the British Bankers’ Association in the United Kingdom have revealed that only 42,792 loans were approved for home buyers over the course of the month. This is a decrease of several hundred compared to the numbers seen in June.
However, there is some good news that offsets the decrease in the British Bankers’ Association’s figures. The average value of newly approved loans has increased for the month. Compared to June’s figure of £163,000, July saw the number go up to £167,000. This is also 12 per cent higher than numbers from this time last year.
There are several reasons why this might be the case. In April, a widespread review of the mortgage market saw the introduction of many new rules on lending. They forced banks and building societies alike to make tougher checks on customers who wanted to take out a mortgage. They wanted to make sure that, if interest rates were to rise, customers could definitely afford to pay off what is owed.
The review of the mortgage market could have resulted in a number of banks approving pay-outs where they usually would. However, the British Bankers’ Association does not believe this is bad news. Instead, they believe that the review has brought the numbers back down to an acceptable standard.
It said: “Mortgage approval processes have now settled after the introduction of the mortgage market review, to a typical level of around 40,000 mortgages approved a month for house purchase, some 12% more than at the same time a year ago.”
One of the other changes seen in the figures was the increase of money flowing into savings accounts. £4.9 billion was being placed into bank accounts for the month of July after the introduction of a £15,000 limit on tax-efficient ISAs.
The chief economist for the British Bankers’ Association said: “The banks have been working with the government to help rebuild Britain’s savings culture. So it’s really encouraging to see evidence of savers taking advantage of the new cash Isa regime in the latest figures. Savings were a little low during the first half of 2014, but it seems people were just waiting until the new rules came into effect to invest their money. Initiatives like Nisa are steps in the right direction but today’s household savings ratio is half that of our parents’ generation. More still needs to be done.”