The British Bankers’ Association has issued figures indicating an increase in mortgage approvals in May compared to April and March. This is good news not only for the property market in general, but also for first-time buyers who have struggled to get onto the property ladder.
BBA members account for approximately 75 per cent of new UK mortgages, so the figures are a good indication of the continuing recovery of lending.
The economic situation in the UK has affected property prices and markets, particularly hindering potential first-time buyers looking to apply for mortgages.
A report by financialadvice.co.uk indicated that the mortgage market itself was also at fault. The increasingly stringent lending guidelines in the UK, introduced as lenders attempted to reduce their short- to medium-term risks, contributed to the difficult climate for first-time buyers.
On the other hand, the rise in approval rates announced by the BBA is most likely an indication that the mortgage market may become friendlier in the near future.
The UK government?s banking levy, expected to raise ?2 billion per year, is also lower than some projections of ?5 billion. What this means for the mortgage market is that lending will continue to grow while lender liquidity will increase, as indeed the recent trend appeared to indicate.
It is therefore expected that the lending trend will continue, and that first-time approvals may become more commonplace in the near future.
The UK housing market can only be as strong as its buyers. Providing better guidelines for lending is the combined responsibility of government and lending regulators, but the increase in mortgage approvals is certainly a sign of better things to come.
