By Laura McGuire
Prospective buyers continue to suffer setbacks as fresh data reveals that mortgage approvals fell during April.
Net mortgage approvals for house purchases fell from 51,500 in March to 48,700 in April, figures from the Bank of England show, with experts predicting that the figure could fall further following the central bank’s decision to hike interest rates in May.
“The mortgage pain is far from over as concerns over how higher interest rates will go has resulted in the withdrawal of seven per cent of mortgages from the market since last week, and an increase in average rates on two- and five-year fixed deals,” Myron Jobson, senior personal finance analyst at Interactive Investor, said.
It’s the latest report released this week which paints a uncertain picture for the housing market, following signs last month that confidence in the market was improving.
Today, figures by Nationwide showed that the annual rate of house price growth slipped back to -3.4 per cent in May from -2.7 per cent in April.
Yesterday, reports by HMRC also showed that a post-early spring lull led to a 32 per cent fall in house prices in April with 67,220 homes sold, 29 per cent lower than the previous month.
“These latest figures show that life is being sucked out of the mortgage market by the relentless rise of interest rates and, to a lesser extent, the cost of living crisis,” Graham Cox, founder, of Self Employed Mortgage Hub, said.
Fox said that the remainder of the year is likely to see “significant falls” in property values even in the unlikely event there are no further rate rises.
He added: “The government, with an election looming, will no doubt try and pull some rabbit out of the hat to stimulate demand, which would be a mistake. A long overdue correction in house prices is what’s needed now. Kicking the can down the road is no longer an option.”
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