The number of mortgages approved for people buying a new home continues to slide, as homeowners opt to sit tight rather than move. Find out why,

What’s the latest?

Mortgage approvals for people buying a home have fallen for the fifth month in a row as housing market activity remains subdued.

June saw a total of 40,200 loans in the pipeline for people buying a property, down from more than 44,300 in January and the lowest level since September last year, according to trade association UK Finance.

Remortgaging numbers were also down year-on-year, with 25,361 people switching their mortgage to one of the major banks, compared with 26,579 in June 2016.

The lack of activity comes despite mortgage rates for homeowners with big deposits remaining at record lows, although costs are starting to rise for those borrowing a higher proportion of their property’s value.Above: Available for £625,000 in Stirling, Scotland, is this four-bedroom detached house

Why is this happening?

A combination of factors is likely to have contributed to the slowdown in mortgage approvals.

Jeremy Leaf, former residential chairman of the Royal Institute of Chartered Surveyors (RICS), said: “These results reflect the June market when buyers were still coming to terms with the election result and its implications for Brexit, as well as their own finances.”

Householders are also feeling more cautious as rising inflation – as a result of the weak pound – is eating into their incomes.

As a result, potential buyers are likely to have continued to bide their time, while those remortgaging are also likely to have been feeling more cautious.

At the same time, there is an ongoing shortage of homes for sale, with the stock on estate agents’ books remaining at record lows, which is likely to have thwarted many people hoping to go ahead with a purchase.Above: This seven-bedroom detached house is for sale in Newry, Northern Ireland, is on the market for £595,000

Who does it affect?

The current low level of housing market activity is a set-back for people who want to buy their first home or trade up or down the property ladder.

Until more homes are put on the market, potential buyers will continue to suffer from a shortage of choice, as well as intense competition from other would-be purchasers.

However, the current discrepancy between supply and demand is supporting property prices, which is good news for existing homeowners.

Sounds interesting. What’s the background?

The figures came as it emerged lenders have started to raise their mortgage rates for first-time buyers.

Despite interest on loans for those with large deposits recently being cut to a record low, people with only 5% to put down have seen average rates on a two-year fixed rate deal jump from 3.89% in January to 4.24% now.

People borrowing 90% of their home’s value have also seen an increase, from 2.72% at the beginning of the year to 2.77% today.

Charlotte Nelson, finance expert at moneyfacts.co.uk, said: “The increase can be largely explained by the inflationary pressures the economy is facing.

“As inflation rises, borrowers’ incomes get eaten away and the probability of a borrower defaulting rises.”

But she added that it was not all doom and gloom for first-time buyers, with more deals currently available than at any time since the financial crisis.Above: Available in Birmingham is this four-bedroom semi-detached house, for £500,000

Top 3 takeaways

  • Mortgage approvals for people buying a home have fallen for the fifth month in a row
  • A total of 40,200 loans were in the pipeline in June for people buying a property, the lowest level since September 2016
  • Remortgaging numbers were also down year-on-year, with 25,361 people switching to a new deal during the month, compared with 26,579 in June 2016

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