July 2014 - First 4 Commercial
7Jul2014

The Mortgage Squeeze

The Mortgage Squeeze

If you’re trying to buy a house, then the news that the overheated housing market is cooling will be welcome. However, tougher new mortgage lending rules are reducing the amount of mortgages being approved. According to figures from the British Banking Association, the number of mortgages being given to borrowers have fallen since May last year, with the total amount of mortgages down to 65, 132 in May 2014 from 70, 294 during April. Overall mortgage approvals are down by 3.5% compared to May last year. However gross mortgage lending rose to £12.2bn in April, which is the highest since August 2008.

The introduction of the Mortgage Market Review (MMR) at the end of the April means mortgage applicants are being more thoroughly scrutinised and asked to undergo ‘stress tests’ in order to assess their ability to pay for the mortgage. As a result, this tougher criteria could be responsible for May’s figures, although the BBA say it’s too early to say.

The reason for limiting mortgages is largely down to fears of a housing bubble and fears of a rise in interest rates, which pose a threat to the entire economy. Bank Governor Mark Carney has warned that an interest rate could be on the cards before the end of the year.

If financing is proving a problem for you, then you could consider alternative options such as a bridging loan if you have existing assets. Bridging loans are ideal for properties that banks are reluctant to grant mortgages for, including those bought at auction and properties that need refurbishment. Call us to find out more about your options.

For more help and useful information go to www.bridgingloansin.co.uk

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