With household incomes under pressure from the weak pound, amidst political uncertainty, it's no surprise the Bank of England says mortgage approvals are still dropping.
What’s the latest?
Mortgages for home purchases fell to a nine-month low in June as activity in the housing market continued to decline.
Only 64,684 mortgages were approved for house purchase during the month, the lowest level since September last year, according to the Bank of England.
The total was also 4,000 fewer than in January – traditionally a quiet month for property transactions.
The figures are the latest in a raft of data pointing to a slowdown in the property market.
But there was a slight increase in the number of loans in the pipeline for people remortgaging, with these increasing to 44,548, as homeowners looked to take advantage of record low mortgage rates by switching to a new deal. Above: This executive style family home, for sale on Zoopla for £579,950, is near a wide range of highly regarded schools in Leeds
Why is this happening?
Various factors are combining to create a slowdown in the property market.
Political and economic uncertainty, created by Brexit and June’s General Election, have caused many would-be buyers to adopt a ‘wait and see’ approach.
At the same time, recent house price gains have led to affordability becoming stretched, at a time when household incomes are under pressure from the weak pound.
Finally, the record low number of homes for sale is hampering those who do want to go ahead and buy a property.
Overall, the number of mortgages approved for house purchase has fallen every month since January.
Who does it affect?
On the one hand, the current stalemate in the property market is bad news for anyone hoping to buy a home.
The shortage of stock on estate agents’ books is deterring homeowners from trading up the property ladder, meaning they are not putting their current homes on the market.
As a result, those who do want to go ahead with a purchase face a shortage of choice and intense competition from other buyers.
But the dynamics may be beginning to shift, with Nationwide Building Society predicting conditions would change in favour of buyers in the quarters ahead.Above: In High Wycombe, Buckinghamshire, this detached two-bedroom Edwardian home is available for £435,000
Sounds interesting. What’s the background?
The shortage of homes for sale has supported property values so far and prevented widespread falls in prices.
But the future direction of the property market will largely depend on developments in the wider economy.
While unemployment remains low, economic growth has been sluggish so far this year, and rising inflation is making households feel less well-off.
The ongoing uncertainty is also expected to make people delay making major purchase decisions.
Despite these factors, most economists are not predicting a house price correction, with many expecting property values to rise by around 2% during 2017 as a whole.
Top 3 takeaways
- Mortgages for home purchases fell to a nine-month low in June
- Only 64,684 mortgages were approved for house purchase during that month
- The total was also 4,000 fewer than in January
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