Officials from the Bank of England have stated that the level of new mortgage approvals in the UK dipped in December, and that this was the seventh month in a row where mortgage approval levels had fallen. In November 2007 there were around 81,000 new mortgage approvals according to recent figures, and this fell to 73,000 in December 2007.
The falling figures have backed up predictions that the housing market will continue to weaken, and reflects the effects of a range of factors including the global credit crunch and tighter lending conditions.
Prior to this month’s interest rate cut from the Bank of England, one industry official stated: “The latest mortgage approval numbers indicate that the current housing slowdown is more pronounced than in 2005. The fallout from the US housing crisis is spreading to the UK via a general squeeze on credit availability and the MPC will seek to offset some of this effect by cutting rates again next month.”
Again, prior to the interest rate cut another official said: “Those who are struggling with mortgage repayments are still faced with paying a large percentage of take-home pay but there may be some release of pressure as earnings continue to rise. If the Bank of England cuts interest rates next week, many will breathe a sigh of relief.”
However, although the Bank of England has now cut interest rates, and many homeowners will be breathing a sigh of relief, household finances are still likely to be strained because of rising energy costs, higher food prices, and increased petrol costs, all of which are having a negative impact on household finances.
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