UK mortgage approvals slump as Covid-19 hits housing market – business live

Rolling coverage of the latest economic and financial news

10.27am BST

Ross Counsell, chartered surveyor and director at Good Move, says the slump in mortgage lending in May show “a bleak output for the UK housing market”

“Short/medium-term, mortgage lenders are going to start requiring larger deposits and move the parameters of their stress tests/affordability calculations – this combined with current job losses and income uncertainty will undoubtedly take many buyers out of the market.

“Long-term we expect to see a boost in the property market across the UK alongside a lift in mortgage and re-mortgage approvals. However, it’s important to note that this is thoroughly dependent on the government’s continuing plans to support people’s jobs and household income.”

‘Covid-19 has had a devastating impact on the mortgage and property markets, so it is no surprise that lending was weak in May, with approvals for house purchase falling. With lockdown meaning that lenders were unable to send valuers out to physically view properties, the number of mortgages approved fell considerably. Lenders were kept busy processing mortgage payment deferrals and trying to get to grips with staff working from home rather than call centres, meaning it was far from ‘business as usual’.

‘However, lenders remain keen to lend and awash with cash to do so. With the backlog of valuations clearing now that surveyors can once again carry out valuations, we expect mortgage approvals to pick up. Mortgage rates remain extremely competitive and lenders are slowly returning to higher loan-to-values, which is good news for first-time buyers in particular.’

10.16am BST

Households repaid more loans from banks than they took out in May, the Bank of England reports.

A £4.6 billion net repayment of consumer credit more than offset a small increase in mortgage borrowing last month.

While the absence of mortgage approvals for house purchase in May is not a surprise, there was no appetite from lenders in terms of remortgaging either. pic.twitter.com/eQC5k5ZR0o

The impact of mortgage payment holidays is pretty clear now. pic.twitter.com/kK3pSU1Tzf

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Source: theguardian
UK mortgage approvals slump as Covid-19 hits housing market – business live