Figures released by the Bank of England have shown that the number of successful mortgage applications is on the rise. The number of mortgages approved in July increased by 49, 239 however the money for these mortgages has not yet been lent to the applicants.
The number of mortgages being approved has increased for three consecutive months now and it is 3% higher than it was in July 2010. These statistics imply that the number of sales will too start to rise shortly.
A director of the Building Societies Association, Adrian Coles, has expressed his belief that the rise in mortgage approvals can be seen in the amount of money being lent out by building societies and those banks that have benefited from government bail outs. He explained that between January and July 2011, such banks approved 16% more mortgages than in the first seven months of last year.
However, it is not all positive as the number of completed sales has declined.
Last week, HMRC released figures showing that in July of this year 79,000 homes were sold in the UK. Although this number is the highest it has been so far this year, it is still not as high as it was during the same period last year.
Howard Archer from IHS Global Insight has explained that as a result of low consumer confidence and a bleak economic outlook, chances are that house prices will continue to drop over the next few months.
Additional statistics released by the Bank of England illustrate that the level of borrowing consumers have has also reduced since 2008, with the total amount of outstanding credit held by consumers falling to £209.4B in July. This is the lowest it has been since 2005 and a 12% reduction on the amount held in 2008.
In the hope of reducing the amount of mortgage fraud, which cost approximately £1B last year, mortgage companies have reached an agreement with HMRC whereby they can send the revenue any mortgage applications which they feel are doubtful and the applicant’s income will be checked. In addition, HMRC will check the accuracy of the individual’s tax returns based on the information provided by the mortgage lender.
It is thought that this new scheme will help both the lenders and the mortgage applicants as confidence can be inspired in the lenders if everything is legitimate which could therefore lead to more approvals in cases where they might have refused based on suspicion.
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MAAT and ICPA accountant, with a passion for making accountancy and bookkeeping accessible. Other interests include cloud-based software development for web and mobile access, keeping fit, reading, and entrepreneurship.