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Mortgage Approvals Down

Written By On 01/05/2014

Even though figures released by Nationwide today show that last month’s UK house prices brought annual growth to nearly 11 per cent, actual mortgage approvals still fell once again according to the Bank of England.

According to the building society, house prices are the highest they have been in four years and grew at the quickest pace in nearly seven years. They say the average UK cost is now £183,577.

However, the home loan acceptance data is a stark contrast, which should release any anxieties concerning a price housing bubble.

The Land Registry information shows that prices decreased in March by 0.4 per cent. But Nationwide’s chief economist Robert Gardner states:

After several months of moderation, the pace of house price growth picked up in April, with prices rising by 1.2% during the month.

Mortgage approvals reached their highest in the month of November 2003 when they hit 133,000. The figure for March 2014 was 67,135, which was nearly 4 per cent lower than the previous month.

Mortgage approvals have now decreased by nearly 12 per cent since the start of the year, even though house prices still appear to be rising.

Cash Sorted reported last week Stringent Loan Tests Ahead that the new Mortgage Market Review has come into force which is widely anticipated to have an adverse effect for mortgage approvals and possibly the mortgage rates that were being offered until recently.

But the data appertains to approvals dwindling well before this date. Many finance experts and mortgage brokers believe that banks and building societies began tightening the rules in preparation of the MMR..

Another explanation that may be a likely scenario is there have been a shortage of homes up for sale (as has been reported by the Royal Institution of Chartered Surveyors), then consequently there must be less applicants for mortgages.