Data from the Bank of England shows the number of people taking out mortgages in February has fallen for the first time in the last year.
The UK’s booming housing market is slowing down with a sharp fall in mortgage approvals at 70,309 for February, down from the January figure of 76,753 and the fall could be due to heavy rain and flooding keeping people indoors.
However, the Bank of England states the January mortgage figures were unusual reaching a six year high and that the housing market for February is at the expected level.
Bank of England warns of action
House prices have been increasing at fast rate and are up more than 10% in some areas of London and the south-east. Governor Mark Carney has warned that the Bank may have to take action to prevent the property market from reaching a bubble.
Mortgage approvals remain below the 90,000 per month levels reached in 2008 before the financial crisis.
Even so the bank of England has warned lenders to take into account rising interest rates when approving mortgages to avoid higher risk lending, especially for first time buyers where affordability can be a stretch.
Is Help to Buy slowing down?
The fall in mortgage approvals to 70,309 is the largest seen in a single month for six years and could be a sign that the initial rush in demand for the Help to Buy scheme is diminishing.
The scheme promotes new homeownership for people that are renting and is not available to switching remortgage buyers or buy-to-let investors.
Phase two of the Help to Buy scheme is popular since it was launched last year allowing first time buyers to make a 5% deposit with a 15% guarantee from the government to the lenders.
This loan is interest free to the borrower and available on all properties up to £600,000 with the balance provided by a mortgage from a lender.
Despite the fall mortgage approvals in February are 33% higher than a year ago indicating there is still strong demand in the housing market.
Help with the deposit for a property can come from family members as the equity release buyer can access cash using a lifetime mortgage to gift to a first time buyer or home mover when they buy.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.
Learn more by using the property value tracker chart, mortgage cost calculator and equity release mortgage calculator. Start with a free mortgage quote or call us and we can take your details.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even give to a family member.
Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.
