The number of mortgages approved by banks and building societies has hit its lowest level for 18 months.
The figures, released by the Bank of England, showed that 60,912 mortgages were approved in the month following the Brexit vote. This represents a sizeable drop from the 64,152 mortgages approved in the previous month. In the same period, the total amount lent dropped by £700m (£11.1bn in May compared to £10.4bn in June).
Commenting on the reasons behind the fall in mortgages, Rob Starr of Crunch Mortgages said:
“Lending is not down due to lack of funds. Lenders want to lend at the moment and have the capital to support that. The problem lenders face is people waiting to get confidence back since Brexit.
“This means those wanting to purchase now are in a less crowded market and have the ability to negotiate. In the year prior to Brexit, properties were flying so quickly that people felt pressured to offer quickly so as not to miss out.”
However, it’s not just bruised confidence that’s causing a slowdown in lending. When it comes to small business owners, the lack of understanding of the self-employed market can also prevent people from securing mortgages. Rob Starr continued:
“Another reason lending is down is people’s inability to prove income. For the self-employed, this is due to misunderstanding and poor advice in the market. Buyers need to ensure they find a broker that specialises in self-employed mortgages, allowing them to secure loans based on their affordability rather than net profit.
“Many banks no longer want to lend directly, meaning people must use a broker to access the majority of offers available. This is happening more and more since regulation forced banks to give mortgage advice, which they never had to before. As such, some lenders now have to turn away people applying direct. Use a broker and you’ll be able to access those deals now.”
If you’re a freelancer, contractor, or small business owner and looking to move home or remortgage, Crunch Mortgages can help.
We’re specialists in securing mortgages for the self-employed and have the knowledge and experience to help get the best deal for you. In most cases, we can offer an agreement in principle within one hour. Arrange your free consultation today.