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Connells: FTBs being 'frozen out'

Jaimie Kanwar

The ‘relentless pressure' on the UK mortgage market continues to cause problems for FTBs.

Responding to new figures from the Bank of England (BoE), which showed that the number of mortgages approved for people buying a house sunk to a new low in May Ross Bowen, managing director of Connells Survey & Valuation, called for ‘new measures to improve financial market liquidity in the market'

He explained: "The squeeze on credit is severely constricting the housing market, even though there is still strong underlying demand for housing.  We need action to improve access to mortgage finance especially for many younger buyers currently frozen out of the market. 

Loans agreed for people moving home fell by 28% to just 42,000 - a third of the number last May. Overall, home loan approvals - including remortgages - plummeted to a seven-year low of just £4.07bn.

Economists had predicted a drop in both approvals and net lending, which strips out redemptions and repayments. But the fall was much steeper than they had been expecting, with net lending down a third on April and 65% below the figure for June last year.

Even approvals for people remortgaging, which have been buoyed in recent months by homeowners looking for new fixed rate deals, were down. Around 90,000 home loans were approved for people remortgaging - 10,000 fewer than in April.

Vicky Redwood, UK economist at Capital Economics, said: "This latest data is absolutely dire. With fixed mortgage rates still rising, don't expect a recovery in housing market activity any time soon."

Nicholas Leeming, director of propertyfinder.com, called on the BoE to taken action: "The Bank of England needs to get the housing market moving again and if rate cuts are not the answer because of its inflation fears then more liquidity for the capital markets certainly is".