Mortgage approvals plummet to 8-month low

A tougher line on mortgages from high-street lenders saw the number of approvals for home loans fall sharply to an eight-month low in April, the British Bankers’ Association said yesterday.

Banks made 42,173 loans for house purchase last month – nearly 3,000 fewer than March and the lowest since last August, the figures showed.

Mortgage lending is now down from 45,045 in March, after falling for a third straight month.

The latest data covers a period when much tighter criteria for lending came in through the Mortgage Market Review in an effort to cool a runaway property market.

Howard Archer, UK economist at IHS Global Insight, said the MMR “has at least temporarily taken some of the steam out of housing market activity”.

“While the MMR only came into effect on 26 April, it is evident that some banks raised their mortgage lending standards before the new regulations kicked in,” he added.

Richard Woolhouse, chief economist at the BBA, said: “Our figures show that the housing market is mixed. The amount of borrowing is however still below the levels we were seeing before the financial crisis.”

The Bank of England’s Financial Policy Committee is expected to give a further dab on the breaks next month with measures to cool mortgage lending. Policymakers hope the use of such tools will give them more leeway to keep interest rates lower for longer.