Money News

Mortgage lending and approvals drop in April

By Martin Fagan - news@consumerchoices.co.uk

Royal Wedding, Easter and multiple Bank Holidays “distracted house buyers”.

The Easter holidays, extra Bank Holidays and the build-up to the Royal Wedding - as well as uncertainty over the economy - all conspired to cause a drop in mortgage lending and approvals in April.

According to figures from the British Bankers Association (BBA), gross lending in April 2011 was 5% lower than in April last year.

House purchase approvals were slightly lower than in March and 18% lower than in April 2010.

The BBA’s findings echo those of the Council of Mortgage Lenders (CML) who last week reported a fall in gross mortgage lending in April of 14% compared with March and a fall of 5% from April 2010.

The CML said house-hunting Brits were distracted by Easter, the Royal Wedding and the extended Bank Holiday weekend.

Commenting on the BBA lending data, Simon Rubinsohn, chief economist at the Royal Institute of Chartered Surveyors (RICS) said: “The BBA highlights a lack of demand for mortgages as a key factor influencing the level of approvals at the present time. We would agree this is one factor, but the cost and availability of finance for first time buyers remains the bigger problem in our view.”

Nevertheless, potential first-time buyers did not believe easy credit was the answer to getting a foot on the first rung of the property ladder.

According to a survey by housing charity Shelter, 84% of first-time buyers believed banks should only offer mortgages to borrowers who can prove they can afford them.