Bank of England reports huge fall in mortgage lending

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There may have been a surge in English house transactions after lockdown restrictions were lifted on May 13, but the pent-up activity hasn’t translated to mortgage approvals. Far from it.

Latest figures from the Bank of England show that lending for house purchases was 9,300 in May – a drop of 6,500 less than in April when the full force of the shutdown was felt. That figure was 90 per cent less than in February this year. At the time around 140,000 new loans had been approved between January 1 and February 29, indicating a growing and healthy UK property market.

Fear lenders will ask for bigger deposits across board

Last month the majority of lenders pulled 95 per cent mortgage deals. That effectively freezes the majority of first-time buyers out of the market.

Now analysts are worried that lenders will start asking for bigger deposits across the board, causing the market to stall, rather than re-assert itself by the end of the year.

Meanwhile, lending for re-mortgages is also down with a drop of 40 per cent since February this year to 30,400 approvals. According to the Bank it’s the lowest since their records began, back in 1993.

Uncertain economy putting off home buyers

But it’s not only the reluctance of lenders that is holding back buyers. Understandably, uncertainty over potential job losses is also a big stumbling block for many individuals who had planned to move before the coronavirus pandemic hit.

In the meantime, the resurgence of buyer interest is expected to boost lending figures next month. Whether those levels will be even half of the pre-lockdown figure remains to be seen.

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