Mortgage approvals down since nosier tests

Mortgage approvals have fallen to a nine month low.

The new affordability tests, which ask a variety of quite tough and nosey questions, are said to be the main cause for this, and hence having a knock on effect on the housing market.

The approvals fell for a third month in April 2014, according to the Bank of England, and these new rules are said to be part of the reason.

The seasonally adjusted figures showed that a total of 62,918 house purchase loans were approved during April, the lowest number since July 2013. It’s also markedly lower than the previous six months’ average of 70,132.

Analysts reckon that these figures, along with those of an increase in manufacturing, showed that the UK economy was undergoing a hoped-for rebalancing away from housing and consumer-dependent growth to an industry-based model.

A man with a great name – Samuel Tombs, who is UK economist at Capital Economics – had this to say:

“The data has provided more encouraging evidence that the recovery is shifting away from its excessive dependence on housing and consumers towards industry”

So the economy may be showing signs of recovery, but be cautious, as these tests may actually really start dragging on the property market. While it’s still happening with house-buying and that, and the market is still vibrant with house prices in England and Wales rising 6.7% in April compared with the same month last year, according to the Land Registry.

The slowdown in approvals over the spring means that in April mortgage lending to homebuyers was 17% below its recent peak of 75,838 in January, when total lending peaked at 124,358 approvals.

Remortgaging has also dropped off since the start of the year, with 31,703 loans approved for existing borrowers who were not moving house. This is below the previous six-month average of 34,316.

The total value of mortgages approved fell to £15.7bn in April, down from £16.3bn in March, while loans for house purchases dropped from £10.6bn to £10bn.

So that’s all super news if you ever do find yourself on the property ladder.

source: bitterwallet.com

Britain loses AAA-rating in Moody's downgrade

WASHINGTON - Rating agency Moody's cut Britain's debt rating Friday by one notch from the top-grade AAA to Aa1, citing slow growth and a rising debt burden.

Moody's also cut its AAA rating for the country's central bank, the Bank of England, by one step, also to Aa1.

The main driver for the sovereign downgrade, Moody's said, "is the increasing clarity that, despite considerable structural economic strengths, the UK's economic growth will remain sluggish over the next few years."

The British economy is constrained both by the turgid global economy, Moody's said, and the drag from businesses and the British government slashing their debt burdens.

Moody's said the country's recovery has proven to be significantly slower than previous rebounds from recession, and Moody's said it did not expect the situation to change.

"Moreover, while the government's recent Funding for Lending Scheme has the potential to support a surge in growth, Moody's believes the risks to the growth outlook remain skewed to the downside."

Moody's said that slow growth would retard a projected rise in tax revenues and make progress difficult for the government's fiscal consolidation program, "which will now extend well into the next parliament."

Meanwhile, the government's growing debt load would reduce the shock-absorption capacity of government finances at least into 2016.

Moody's projected that government debt would continue to rise and peak at 96 percent of gross domestic product in 2016, much later than previous projections.

"After it was elected in 2010, the government outlined a fiscal consolidation program that would run through this parliament's five-year term and place the net public-sector debt-to-GDP ratio on a declining trajectory by the 2015-16 financial year," ratings agency said.

"Now, however, the government has announced that fiscal consolidation will extend into the next parliament, which necessarily makes their implementation less certain."

Moody's however put Britain on a stable outlook, guardedly confident that political will combined with some medium-term fundamental economic strengths "will, in time, allow the government to implement its fiscal consolidation plan and reverse the UK's debt trajectory."

source: interaksyon.com