Mortgage approvals plummeted to an all-time low in May, leaving many would-be buyers with no alternative but to rent for longer.
The latest Bank of England data shows that the number of mortgage approvals in May fell far short of expectations, with only 9,300 approvals, as the Covid-19 pandemic pushed the housing market to a virtual halt.
New mortgage approvals collapsed by 90% compared to pre-pandemic levels and represent just a third of the lowest level seen during the 2008 financial crisis. May’s mortgage approvals were also below economists’ forecasts of 25,000 new approvals.
Franz Doerr, founder and CEO of flatfair, said: “With the number of mortgage approvals falling far short of expectations and setting a new low in May, it is clear that the housing market has not snapped back to pre-pandemic levels.
“The consequence of this will be to accelerate the recent trend of Britons renting for longer than ever before. The rental sector needs to continue its work to make life better for tenants, both in terms of being able to rent the kinds of properties they want easily, and also in offering homes that are fit for a new wave of remote working and social distancing.”
Remortgage approvals fell to 30,400, marginally less than the 34,400 recorded in April.
The value of purchase approvals hit £1.9bn in May while remortgage approvals amounted to £5.3bn.
Gross mortgage lending rose slightly to £14.8bn in May, compared to £14.4bn April.
Hina Bhudia, a partner at mortgage broker Knight Frank Finance, commented: “Leading indicators suggest lending has been picking up since May, but it's clear there is still a long way to go before many borrowers experience anything resembling pre-pandemic conditions.”