Bloomberg reports that Mortgage Approvals Have Remained Very Low

As reported by major media outlets both in the UK and abroad, the number of mortgages approved in the United Kingdom has dropped or remained at its low rate. Indeed, the numbers from November 2010 have been collected, and it seems that the banks remained tight when it came to their eagerness to give out loans and mortgages. This squeeze on lending will likely cause additional problems for those seeking mortgages or other types of borrowed money.

Approvals in the UK continue to remain low despite additional efforts by regulatory groups in the United Kingdom. The numbers from November demonstrate a level close to the eight month low for mortgage approvals in the UK. Specifically, lenders granted 48,019 loans for people wanting to buy homes. This was compared with 47,315 granted in October, just a month before. The Bank of England, the central bank for the entire United Kingdom, released these numbers to financial analysts in January 2011.

The constrained property market continues to have problems as mortgage rates are still depressed. Top Economists in the UK have forecasted a number of 46,500 as being the amount of mortgages which will be granted. This number was taken from the median of data collected from a Bloomberg survey. The net mortgage lending amount was £788 million which is much smaller than the amount of £1.2 billion released in the same period the previous year.

Other economists commented on the current mortgage situation such as Ross Walker, an economist at Royal Bank of Scotland Group Plc. The office based in London gave a telephone interview on the mortgage crisis in the UK. Without the new round of mortgage finance, it seems unlikely that prices will remain propped up at the levels they are at currently. Because of this, there will likely be drops in the prices of houses in the UK this year, instead of the increase forecasted by some overzealous economists. The decline in house prices has been posted at 5% for 2011.

Supporting data for this report comes from previous periods of supply for mortgages in the UK. The value of houses in December 2010 dropped by 0.4%; this is compared to the value of the same batch of houses the month before. This drop, extrapolated out over the entire 12 months of 2011 will equate to the drop of 5%. This will only continue to weaken the housing market, which has had repeated issues in the past four years.

Other agencies are reporting that house values will fall by 2.5% in 2011 based on the lack of mortgage availability and the fact that the government has been cutting its spending for mortgage assistance funds. In addition to these likely declines in mortgage supply, a measure of the M4 money supply shows that the central bank, the Bank of England, raised the money supply by 3.5% during the months leading up to and including November. This value includes financial firms which specialize in conducting deals between banks. Some of these players include holding companies, shell firms, and non-bank creditors.