60% of Mortgage Applications Refused

HAMISH_MCTAVISH

Mortgage applications for house purchase in August had a monthly fall of 2.3% but, claims the Mortgage Advice Bureau, were an astonishing 34.8% up on August last year

MAB, which operates via network of independent estate agents, will not be drawn on the percentage of its applicants who are successful but on current industry performance, 60% of applications are turned down.

MAB said that under 70% of applicants chose fixed rate deals – the lowest level for ten months.

The fall suggests that an increasing number of borrowers are responding to speculation that rates could remain unmoved until 2013.

The average loan size on mortgage applications in August was £135,397, down slightly on July figure of £135,873.

The average LTV on mortgage applications in August was 71.4% compared to 69.1% in July.

The average deposit put down by a mortgage applicant in August was £54,235, down significantly on the average deposit of £60,759 in July.

The average age of a mortgage applicant in the UK in August was 37 years 7 months and the average salary of a mortgage applicant was £33,777.

MAB reports on a similar pattern of activity in remortgages, with applications down 5.6% in the month. However, application numbers in August were still up 48.1% on August 2010.

http://www.estateagenttoday.co.uk/news_features/Mortgage-applications-up-35-over-the-year-says-MAB

Mortgage rationing continues.

Conrad

Funnily enough I'm arguing over in the Discussion Time area that landlords are taking an ever bigger share as FSA rules (in part) bar many from accessing a mortgage, but as yet people are not recognising the gravity of the situation. We get the usual ignorant claims that regulation is an all round benefit. One guy is pleased it's harder to buy now, even though he is sitting pretty with 2 houses having benefited from the last 20 years HPI.

Ah well.

PS - of course rationing is also a function of lender caution, not just regulation.

MacMickster

So on average, 50% of applicants are applying for mortgages of 4 times salary or higher, and doubtless not all have spotless credit records. It doesn't surprise me that in those circumstances 60% are being turned down.

ILW

Whats is the diffence between rationing and a shortage?

Percy1983

HAMISH_MCTAVISH wrote: »

Mortgage sensible lending continues.

Fixed that for you.

Road_Hog

ILW wrote: »

Whats is the diffence between rationing and a shortage?

Shortage is when there is physically not enough of something to go around. Rationing is where there is plenty/enough supply, but those that control the supply release less than is required by the market. There are a number of reasons, but one reason could be profit, to keep the price artificially high, a bit like OPEC restrict oil production/supply when the price drops too low.

ILW

Surely what we are seeing is cherry picking rather than rationing.

Road_Hog

ILW wrote: »

Surely what we are seeing is cherry picking rather than rationing.

That wasn't the question that you asked.

CLAPTON

it would be interesting to have a more complete picture of why people are turned down

MacMickster

ILW wrote: »

Surely what we are seeing is cherry picking rather than rationing.

Exactly this.

I think that anyone who says that they can confidently predict what the economy, unemployment rates, interest rates and house prices will look like in 5 to 10 years time is either a fool or a liar.

Because of this, lenders are choosing to lend only to borrowers who they consider to be very low risk, whatever happens to any/all of the above. At the moment it is probably a bit of a belt and braces (and even hands in pockets for added safety) approach, but that is surely better than a fingers crossed and hope for the best attitude to lending.

doire_2

HAMISH_MCTAVISH wrote: »

http://www.estateagenttoday.co.uk/news_features/Mortgage-applications-up-35-over-the-year-says-MAB

Mortgage rationing continues.

Get used to it and stop moaning :T